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Appears in Collections:Economics Working Papers
Title: Preference Conditions for Invertible Demand Functions
Author(s): Diasakos, Theodoros M
Gerasimou, Georgios
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Citation: Diasakos TM & Gerasimou G (2020) Preference Conditions for Invertible Demand Functions. School of Economics and Finance Discussion Papers, 1708.
Issue Date: 20-Aug-2020
Date Deposited: 30-Sep-2020
Series/Report no.: School of Economics and Finance Discussion Papers, 1708
Abstract: It is frequently assumed in several domains of economics that demand functions are invertible in prices. At the primitive level of preferences, however, the corresponding characterization has remained elusive. We identify necessary and sufficient conditions on a utility-maximizing consumer's preferences for her demand function to be continuous and invertible: strict convexity, strict monotonicity and differentiability in the sense of Rubinstein (2006). We further show that Rubinstein differentiability is equivalent to the indifference sets being smooth, which is weaker than Debreu's (1972) notion of preference smoothness. We finally discuss implications of our analysis for demand functions that satisfy the "strict law of demand".
Type: Working Paper
Rights: Authors retain copyright. Proper attribution of authorship and correct citation details should be given.
Affiliation: Economics
University of St Andrews
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