Demand and equilibrium with inferior and Giffen behaviors

Cuong Le Van (1, 2, 3, 4, 5, 6) , Ngoc-Sang Pham (7)

1 IPAG Business School
2 CES - Centre d'économie de la Sorbonne
3 PSE - Paris School of Economics
4 Academy of Policy and Development
5 TIMAS - Institute of Mathematics and Applied Science
6 Konan University [Kobe, Japan]
7 Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School

We introduce a class of differentiable, strictly increasing, concave utility functions exhibiting an explicit demand of a good which may have Giffen behavior. We provide a necessary and sufficient condition (based on prices and consumers’ preferences and income) under which this good is normal, inferior or Giffen. A general equilibrium analysis is also provided.

Keywords: Inferior good; Giffen good; Equilibrium price

Domains: Humanities and Social Sciences; Economics and Finance

Cuong Le Van, Ngoc-Sang Pham. Demand and equilibrium with inferior and Giffen behaviors. Mathematical Social Sciences, 2020, 103, pp.45-50. ⟨10.1016/j.mathsocsci.2019.11.005⟩. ⟨hal-03261235⟩