Stone–Geary utility function

where is utility, is consumption of good , and and are parameters.

The Stone–Geary utility function takes the form

For , the Stone–Geary function reduces to the generalised Cobb–Douglas function.

The Stone–Geary utility function gives rise to the Linear Expenditure System,[1] in which the demand function equals

where is total expenditure, and is the price of good .

The Stone–Geary utility function was first derived by Roy C. Geary,[2] in a comment on earlier work by Lawrence Klein and Herman Rubin.[3] Richard Stone was the first to estimate the Linear Expenditure System.[4]

References

  1. Varian, Hal (1992). "Estimating consumer demands". Microeconomic Analysis (Third ed.). New York: Norton. pp. 212. ISBN 0-393-95735-7.
  2. Geary, Roy C. (1950). "A Note on 'A Constant-Utility Index of the Cost of Living'". Review of Economic Studies. 18 (2): 65–66. JSTOR 2296107.
  3. Klein, L. R.; Rubin, H. (1947–8). "A Constant-Utility Index of the Cost of Living". Review of Economic Studies. 15 (2): 84–87. JSTOR 2295996. Check date values in: |year= (help)
  4. Stone, Richard (1954). "Linear Expenditure Systems and Demand Analysis: An Application to the Pattern of British Demand". Economic Journal. 64 (255): 511–527. JSTOR 2227743.

Further reading

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