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The Extended Slutsky Equation Revisited

The Extended Slutsky Equation Revisited This article, making standard assumptions, tests the effect thatcross price elasticity of demand has on consumer directly and producerindirectly behaviour. Two classes of utility functions are employedone is U XnYm, which is asymptotically convex and, hence,conventional another is U Xn Ym, which isnonasymptotically convex and, therefore, unconventional. As a result,the rationally intended consumer of the conventional function behavesirrationally, questioning the marginal base of the analysis of the firm.The irrationally contemplating consumer of the unconventional functionacts rationally, upholding such marginal analysis. Thus, the validity ofthe direct relation between intentions and actions is doubted. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

The Extended Slutsky Equation Revisited

International Journal of Social Economics , Volume 17 (10): 6 – Oct 1, 1990

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0306-8293
DOI
10.1108/EUM0000000000458
Publisher site
See Article on Publisher Site

Abstract

This article, making standard assumptions, tests the effect thatcross price elasticity of demand has on consumer directly and producerindirectly behaviour. Two classes of utility functions are employedone is U XnYm, which is asymptotically convex and, hence,conventional another is U Xn Ym, which isnonasymptotically convex and, therefore, unconventional. As a result,the rationally intended consumer of the conventional function behavesirrationally, questioning the marginal base of the analysis of the firm.The irrationally contemplating consumer of the unconventional functionacts rationally, upholding such marginal analysis. Thus, the validity ofthe direct relation between intentions and actions is doubted.

Journal

International Journal of Social EconomicsEmerald Publishing

Published: Oct 1, 1990

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