# Tag Info

Accepted

### Estimating CES utility (not production) function parameters

It may be interesting to exploit the homothetic separability of the CES utility function in $x$. It implies that $$\frac{x_i}{x_j} = \left( \frac{\alpha_i}{\alpha_j}\frac{p_j}{p_i} \right)^\sigma$$ ...
• 3,371

• 13.4k
Accepted

### How to prove a generalised function is quasiconcave?

Note first that the function $r\mapsto A(r)^{\mu/p}$ is strictly increasing on $\mathbb{R}_+$. When you look at the minimum in the definition of quasi-concavity, you can therefore ignore this part and ...
• 13.4k

### Estimating CES utility (not production) function parameters

These other answers seem to be citing some methods I haven't quite heard about yet however they all touch upon the idea developed by Czech economist named Jan Kmenta which has come to be known as the ...
• 8,397
Accepted

### Is there a name for this type of CES look-alike utility function?

I believe it can be found as "nested CES" See for example: Nested CES
• 517
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### CES utility function in an Edgeworth box

There seems to be some confusion in the expression for $x^*_i$ in the question that whether $i$ is for consumer of for the good. Assuming $i$ is for consumer: Let $x^*_i = (x_1^i,x_2^i)'$ be the ...
• 1,819
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### Bellman equation corresponding to stochastic EZW recursive utility

What you have there are the preferences under an arbitrary policy -- what some call the prevalue function. The only thing missing is the max operator. Written with maximization (and making the state ...

• 12.5k
Accepted

### Tastes in Cobb-Douglas vs CES: Different degree of homogeneity

(I am adding another answer since the question has been reworded.) I think your question contains a misunderstanding which stems from your usage of the same parameter names $\alpha_1$ and $\alpha_2$ ...
• 7,069
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### LSE EC417 2023: Markup as Elasticity Tends to Unity

A monopolist will always produce on the elastic part of the demand curve. The idea is the following: if the output level is on the inelastic pat of the demand curve, then increasing prices, by 1% will ...
• 12.5k

### CES Price Index in Melitz (2003)

Intuitively it's quite understandable, right? Though, if we just think the Calculus, I think it should go through as follows: Consider a joint density $\Lambda(\omega, \phi)$ with $\omega\in\Omega$ ...
Accepted

### Why can the Lagrangian Multiplier be dropped in the inverse demand function?

The Lagrangian is given by: $$L = x_0 + \frac{1}{\mu} \sum_{j = 1}^J X_j^\mu - \lambda(x_0 + \sum_j \int_i p_j(i) x_j(i) di - m).$$ The first order condition (for an interior solution) with respect ...
• 12.5k
1 vote

### Cost function from a weighted CES production function

I'll use $(w_1, w_2)$ to denote the factor prices instead of $(p_1, p_2)$ as the latter is traditionally used for output prices. $c(w_1, w_2, y)$ solves the maximization problem: \max_{x_1, x_2 \ \...
1 vote

### Are homothetic additively separable preferences always equivalent to CES?

The second to top "Related" question (What utility functions are equivalent to additive functions?) contained a link to Ted Bergstrom's Lecture Notes on Separable Preferences, which answered ...
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1 vote

### What is an example of utility function where the proportion of one goes to zero?

$U(x_1,x_2)=\min\{x_1^2,x_2\}$.
• 13.4k

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