1. Market demand and income distribution: a theoretical exploration
- Author
-
Lambert, Peter J. and Pfahler, Wilhelm
- Subjects
Disposable income -- Research ,Demand (Economics) -- Research ,Business ,Business, general ,Business, international ,Economics - Abstract
This paper sets out to explore theoretically how a change in the distribution of disposable income affects the market demand for a good or service. With the help of only minimal information on the shape of the Engel curve and the transition from one distribution to the other, a variety of empirically relevant constellations are identified in which the size (or mean income) effect on market demand is counteracted by the distributional effect. Since the determining factors are expressed by relations between summary statistics, the results at the same time provide theoretically sound restrictions on economic approaches to market demand analysis., Changes in the distribution of disposable income have an effect on market demand for a good or service. There is an assortment of empirically relevant constellations in which the impact of the mean income on market demand is information based on the shape of the Engel curve and differences between income distributions.
- Published
- 1997