Preference Conditions for Invertible Demand Functions

B-Tier
Journal: American Economic Journal: Microeconomics
Year: 2022
Volume: 14
Issue: 2
Pages: 113-38

Score contribution per author:

1.009 = (α=2.02 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

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."

Technical Details

RePEc Handle
repec:aea:aejmic:v:14:y:2022:i:2:p:113-38
Journal Field
General
Author Count
2
Added to Database
2026-01-25