Some theory of inverse demand for applied demand analysis

Inverse demand functions are often useful econometric representations of consumer behavior. This paper establishes some theoretical properties of inverse demands which aid their interpretation and facilitate calculations related to them. We introduce the notion of scale elasticity which is shown to play for inverse demands much the same role that income elasticity does for direct demands. It is used in a decomposition of Antonelli effects which is analogous to the Slutsky equation for direct demands.

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