Abstract
We formulate several laws of individual and market demand and describe their relationship to neoclassical demand theory. The laws have implications for comparative statics and stability of competitive equilibrium. We survey results that offer interpretable sufficient conditions for the laws to hold and we refer to related empirical evidence. The laws for market demand are more likely to be satisfied if commodities are more substitutable. Certain kinds of heterogeneity across individuals make the laws more likely to hold in the aggregate even if they are violated by individuals.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Baruch, S., and Y. Kannai. 2002. Inferior goods, Giffen goods, and shochu. In Economics essays, ed. G. Debreu, W. Neuefeind, and W. Trockel. Berlin: Springer.
Bewley, T. 1977. The permanent income hypothesis: A theoretical formulation. Journal of Economic Theory 16: 252–292.
Brighi, L. 2004. A stronger criterion for the weak weak axiom. Journal of Mathematical Economics 40: 93–103.
Chiappori, P.-A. 1985. Distribution of income and the ‘law of demand’. Econometrica 53: 109–128.
Chipman, J. 1977. An empirical implication of Auspitz–Lieben–Edgeworth–Pareto complementarity. Journal of Economic Theory 14: 228–231.
Evstigneev, I.V., W. Hildenbrand, and M. Jerison. 1997. Metonymy and cross-section demand. Journal of Mathematical Economics 28: 397–414.
Freixas, X., and A. Mas-Colell. 1987. Engel curves leading to the weak axiom in the aggregate. Econometrica 55: 515–531.
Giraud, G., and J.K.H. Quah. 2003. Homothetic or Cobb–Douglas behavior through aggregation. Contributions to Theoretical Economics 3(1), Article 8.
Grandmont, J.M. 1987. Distribution of preferences and the ‘law of demand’. Econometrica 55: 155–161.
Grandmont, J.M. 1992. Transformations of the commodity space, behavioral heterogeneity, and the aggregation problem. Journal of Economic Theory 57: 1–35.
Härdle, W., W. Hildenbrand, and M. Jerison. 1991. Empirical evidence on the law of demand. Econometrica 59: 1525–1549.
Härdle, W., and T. Stoker. 1989. Investigating smooth multiple regression by the method of average derivatives. Journal of the American Statistical Association 84: 986–995.
Hildenbrand, W. 1983. On the law of demand. Econometrica 51: 997–1019.
Hildenbrand, W. 1994. Market demand. Princeton: Princeton University Press.
Hildenbrand, W., and A. Kirman. 1988. Equilibrium analysis. Amsterdam: North-Holland.
Hildenbrand, W., and A. Kneip. 1993. Family expenditure data, heterscedasticity and the law of demand. Ricerche Economiche 47: 137–165.
Jerison, M. 1999. Dispersed excess demands, the weak axiom, and uniqueness of equilibrium. Journal of Mathematical Economics 31: 15–48.
Jerison, M. 2001. Demand dispersion, metonymy and ideal panel data. In Economics essays, ed. G. Debreu, W. Neuefeind, and W. Trockel. Berlin: Springer.
Kannai, Y. 1989. A Characterization of monotone individual demand functions. Journal of Mathematical Economics 18: 87–94.
Kihlstrom, R., A. Mas-Colell, and H. Sonnenschein. 1976. The demand theory of the weak axiom of revealed preference. Econometrica 44: 971–978.
Mas-Colell, A. 1991. On the uniqueness of equilibrium once again. In Equilibrium theory and applications, ed. W. Barnett et al. Cambridge: Cambridge University Press.
Mas-Colell, A., M.D. Whinston, and J.R. Green. 1995. Microeconomic theory. Oxford: Oxford University Press.
Milleron, J.C. 1974. Unicité et stabilité de l’équilibre en économie de distribution. Unpublished seminar paper, Séminaire d’Econométrie Roy-Malinvaud. Paris: CNRS.
Mitjuschin, L.G., and W.M. Polterovich. 1978. Criteria for monotonicity of demand functions. Ekonomika i Matematicheskie Metody 14: 122–128.
Quah, J.K.-H. 1997. The law of demand when income is price dependent. Econometrica 65: 1421–1442.
Quah, J.K.-H. 2000. The monotonicity of individual and market demand. Econometrica 68: 911–930.
Quah, J.K.-H. 2003. The law of demand and risk aversion. Econometrica 71: 713–721.
Stiglitz, J.E. 1987. The causes and consequences of the dependence of quality on price. Journal of Economic Literature 25(1): 1–48.
Vives, X. 1987. Small income effects: A Marshallian theory of consumer surplus and downward sloping demand. Review of Economic Studies 54: 87–103.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Jerison, M., Quah, J.K.H. (2018). Law of Demand. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2413
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_2413
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences