Many applied demand models assume $λ$-separability without checking that a rationalizing utility function exists. We provide closed-form utility functions for several common families.

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Abstract

Many commonly used demand systems in applied economics assume that demands are separable in the multiplier \(\lambda\) on the consumer’s budget constraint. We provide closed-form expressions for the utility functions that rationalize several important families of $λ$-separable Frisch demand systems, including demands that are affine in \(\lambda\) and demands with constant expenditure elasticities.

BibTeX

@Article{	  ligon16b,
  author	= {Ethan Ligon},
  title		= {Some $\lambda$-Separable Frisch Demands with Utility
                Functions},
  journal	= {Economics Bulletin},
  year		= 2016,
  volume	= 36,
  number	= 1,
  pages		= {A8},
  url		= {https://escholarship.org/uc/item/1s06c2zp}
}