Stone–Geary utility function
The Stone–Geary utility function takes the form
where is utility, is consumption of good , and and are parameters.
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 case of 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
- ^ Varian, Hal (1992). "Estimating consumer demands". Microeconomic Analysis (Third ed.). New York: Norton. pp. 212. ISBN 0-393-95735-7.
- ^ 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.
- ^ Klein, L. R.; Rubin, H. (1947–1948). "A Constant-Utility Index of the Cost of Living". Review of Economic Studies. 15 (2): 84–87. JSTOR 2295996.
- ^ 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
- Neary, J. Peter (1997). "R.C. Geary's Contributions to Economic Theory" (PDF). In Conniffe, D. (ed.). R.C. Geary, 1893–1983: Irish Statistician. Dublin: Oak Tree Press. Archived from the original (PDF) on 2005-03-25.
- Silberberg, Eugene; Suen, Wing (2001). "Empirical Estimation and Functional Forms". The Structure of Economics: A Mathematical Analysis (Third ed.). Boston: Irwin McGraw-Hill. pp. 357–363. ISBN 0-07-234352-4.