The Substitution Effect from the Profit Function in Consumption: Expressions from the Marshallian, Hicksian, and Frischian demand functions

José Ignacio Gimenez-Nadal


In the context of the optimizing behaviour assumption of individuals (Becker, 1976), three types of demand functions appear: Marshallian, Hicksian, and Frischian functions (Sproule, 2013). The Substitution Effect (SE) is a relevant concept, with our short paper developing two alternative theoretical expressions, specifically focusing on the Profit Function in Consumption and the Frischian functions. I address the fact that these demand functions with constant marginal utility of income play a very relevant role in the inter-temporal context.

Full Text:



Altonji, J. G. (1986) Intertemporal substitution in labor supply: evidence from micro data, Journal of Political Economy, 94, S176-S215.

Ashenfleter, O., and Heckman, J. J. (1974) The Estimation of Income and Substitution Ef-fects in a Model of Family Labor Supply, Econometrica, 42, 73-85.

Becker, G. (1976) The Economic Approach to Human Behavior, The University of Chicago Press.

Browning, M. (1982) Profit function representations for consumer preferences, Bristol Univer-sity Discussion Paper No 82/125.

Brandt, L., Siow, A., and Wang, J. (2013) Substitution effects in parental investments, Jour-nal of Population Economics, 28, 423-462.

Frisch, R. (1932) New Methods of Measuring Marginal Utility, Verlag Von J. C. B. Mohr, Tü-bingen.

Frisch, R. (1959) A complete scheme for computing all direct and cross demand elasticities in a model with many sectors, Econometrica 27, 177-196.

Houthakker, H. S. (1960) Additive preferences, Econometrica, 28, 244-256.

Manoli, D., and Weber, A. (2010) Intertemporal substitution in labor force participation: evi-dence from policy discontinuities, IZA Discussion Paper No. 5248.

Molina, J. A. (2011) Household Economic Behaviors, Springer.

Sproule, R. (2013) A systematic analysis of the link amongst the Marshallian, Hicksian, and Frischian demand functions: A note, Economic Letters, 121, 555-557.



  • There are currently no refbacks.

ISSN: 2254-4380