Smoothing demand by aggregation with respect to wealth

Author: Egbert Dierker, Hildegard Dierker, Walter Trockel
Publisher: Elsevier BV

ABOUT BOOK

Dierker E, Dierker H, Trockel W. Smoothing demand by aggregation with respect to wealth. Journal of Mathematical Economics. 1980;7(3):227-247.We suggest in this paper to treat the problem of smoothing demand by aggregation in a two-step procedure, corresponding to the two different constituents of consumption characteristics, wealth and preferences. Instead of imposing a manifold structure on preferences we exploit the nice structure of wealth-space. The first step of this procedure, aggregation with respect to wealth, is carried out. It is shown that, for any preference, aggregation with respect to wealth yields a mean demand which is almost everywhere C 1. Moreover, it is shown that for an important class of preferences, vanishing Gaussian curvature of indifference surfaces does not destroy differentiability of the mean demand function

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