Market Demand (ebook)

Argumento de Market Demand (ebook)

In a major work that is the culmination of over a decade of intensive research, Werner Hildenbrand presents a new theory of market demand, the principal aim of which is to identify the conditions under which the Law of Demand holds true. Hildenbrand argues that the Law of Demand is due mainly to the "heterogeneity" of the population of households. In his view, "rationality" of individual behavior plays only a minor role. While the traditional approach to the theory of market demand is to analyze the question, To what extent are the postulated properties of individual behavior preserved by going from individual to market demand?, this book asks the question, Which properties of the market demand function are created by the aggregation process?.

Two hypotheses on the population of households play a key role in Hilden-brand's thinking. The first is the "increasing dispersion" and the second the "increasing spread" of households' demand. These hypotheses can easily be interpreted and are a priori plausible. For a positive theory of market demand, according to Hildenbrand, it is more important that the hypotheses are well supported by empirical evidence. His claims in this important new book are based on a nonparametric statistical data analysis of the U.K. Family Expenditure Survey and the French Enquête Budget de Famille.

Originally published in 1994.

The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.0Preface 1 Introduction 3 1.1 The Law of Market Demand 3 1.2 Wald's Axiom 7 1.3 Validation of Hypotheses on Market Demand 9 1.4 On Individual Behavior: Introspection and Plausibility 10 1.5 Substitution and Income Effects 15 1.6 Increasing Spread of Households' Demand 19 1.7 Family Expenditure Data: Increasing Spread of Conditional Demand 22 1.8 Increasing Dispersion 26 2 Market Demand 30 2.1 The Distribution of Households' Demand 30 2.2 A Microeconomic Model: The Distribution of Households' Characteristics 35 2.3 Hicks-Leontief Composite Commodity Theorem 49 2.4 Family Expenditure Surveys: The Data 52 3 Increasing Dispersion 72 3.1 The Hypothesis of Increasing Dispersion of Households' Demand 74 3.2 Examples 88 3.3 Empirical Evidence of Increasing Dispersion of Households' Demand 93 Conclusion to Chapter 3 119 Notes on Chapter 3 120 4 The Law of Demand 122 4.1 The Hypothesis of Increasing Spread of Households' Demand 123 4.2 Empirical Evidence of Increasing Spread 133 4.3 Deductive Validation of Hypothesis 3 156 Notes on Chapter 4 166 App. 1. Monotone Functions 168 App. 2. Wald's Axiom 171 App. 3. The Weak Axiom of Revealed Preference and the Slutsky Decomposition 175 App. 4. Monotonicity of Individual Demand Functions 180 App. 5. Spread and Dispersion 185 App. 6. The Structure of the Matrix B [actual symbol not reproducible] 187 References 195 Author Index 199 Subject Index 201 Index of Frequently Used Symbols 205