Market Demand and Income Distribution: a Theoretical Exploration

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 empiricall...

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Bibliographic Details
Published in:Bulletin of economic research 1997-04, Vol.49 (2), p.137-151
Main Authors: Lambert, Peter J., Pfähler, Wilhelm
Format: Article
Language:English
Subjects:
Demand
Economic theory
Income distribution
Studies
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Summary: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.
ISSN:0307-3378
1467-8586
DOI:10.1111/1467-8586.00031