Seminars 2008 — Abstracts

Friday, June 6

Speaker: Keith McLaren, Monash

Title: The Benefit Function and Consumer Demand Theory

Abstract: This seminar explores the use of the benefit function in specifying price-dependent or inverse demand models. In particular, we demonstrate how duality theory may be used to establish the inter-relationships between the Marshallian (or Hicksian) inverse demands and Luenberger's adjusted price functions, allowing estimable inverse demands to be derived directly from a benefit function specification. We make use of a numerical inversion estimation method to rectify the “unobservability of utility problem” to allow practical application, and illustrate by estimating a system of inverse demands for Japanese quarterly fish consumption. The seminar will provide the background results needed to understand the place of the benefit function in this literature.