The Representative Consumer Concept and Inequality
Bibliographic Data
| ID | 9720816 |
|---|---|
| Authors | Panos Pashardes (corresponding author) |
| Year | 1982 |
| Volume | 49 |
| Issue | 196 |
| Pages | 461 |
| Publication date | 1982-11-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/2552965 |
| OpenAlex | W2044387635 |
| Language | EN |
| References cited | 6 |
One of the most important recent developments in the theory of consumer behaviour has been the constructive approach to the problem of consistent transition from the microeconomics of consumer behaviour to the analysis of market demand, a problem referred to as the problem. Earlier economists opt for an escape from this problem by assuming that for each good all consumers have the same marginal propensity to consume, a condition that Gorman (1953) proves necessary and sufficient for consistent linear aggregation. Gorman's solution, however, is very restrictive: it implies that all Engel curves are linear. This assumption contradicts most empirical evidence on cross-section consumer demand and has prompted some economists to search for less restrictive (nonlinear) demand systems which satisfy the requirements for consistent aggregation. Pearce (1964) and Diewert (1974) report successes in this field, but the first systematic treatment of the problem of aggregation in a system of nonlinear Engel curves is found in the Generalised Linear (GL) model, which is due to Muellbauer (1975, 1976). The basic feature of the GL demand system is that the effect of budget (re-)distribution on the structure of aggregate demand is taken explicitly into account through the notion of the consumer (i.e. the consumer whose budget shares are identical to the shares of commodities in market demand). The following section presents a simple diagram illustrating the principle on the basis of which the GL system tackles the problem of aggregation. Section II examines the properties and welfare implications of the inequality index that underlines the representative consumer approach, and Section III concludes the paper
Economics · Inequality · Mathematical analysis · Consumer Market Behavior and Pricing · Economic theories and models · Economics of Agriculture and Food Markets · Mathematics
| Highly cited | No |
|---|