Income inequality and price elasticity of market demand: the case of crossing Lorenz curves
Published version
Peer-reviewed
Repository URI
Repository DOI
Change log
Authors
Ibragimov, M
Ibragimov, R
Kattuman, PA
Ma, J
Abstract
This paper extends Ibragimov and Ibragimov (Econ Theory 32:579–587, 2007) in which the effect of changes income inequality on the price elasticity of market demand is characterized for the class of income distribution changes occurring through non-intersecting Lorenz curve shifts. We derive sufficient conditions for increase/decrease in price elasticity of market demand, under general changes in income distribution, allowing Lorenz curves to intersect as they shift. We conclude by drawing out implications of different types of tax policy changes for demand elasticity.
Description
Keywords
income distribution, inequality, downside inequality aversion, transfer sensitivity, market demand elasticity, direct tax policy
Journal Title
Economic Theory
Conference Name
Journal ISSN
0938-2259
1432-0479
1432-0479
Volume Title
65
Publisher
Springer