Change and Innovation in the Technology of Consumption
Author(s)
Lancaster, Kelvin
Abstract
Conventional economic theory assumes that any individual’s desires for goods are independent of the actions and desires of others. More formally, individuals’ demand curves are assumed to be independent of each other, so that the market demand curve for a commodity can be regarded as a simple sum of individuals’ demands at each price. But that assumption is often inappropriate; in many important instances, individual demands interact with each other. This selection presents three instances of such behavior and demonstrates graphically how the theory of consumer demand can be extended to accommodate interactions between individuals.
