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2. Intermediate Microeconomics Hal R Varian
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The Stone–Geary utility function takes the form

${\displaystyle U=\prod _i(q_i-{\gamma }_i{)}^{{\beta }_i}}$

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where ${\displaystyle U}$ is utility, ${\displaystyle q_i}$ is consumption of good ${\displaystyle i}$, and ${\displaystyle \beta }$ and ${\displaystyle \gamma }$ are parameters.

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For ${\displaystyle {\gamma }_i=0}$, the Stone–Geary function reduces to the generalised Cobb–Douglas function.

The Stone–Geary utility function gives rise to the Linear Expenditure System,^[1] in which the demand function equals

${\displaystyle q_i={\gamma }_i+\frac{{\beta }_i}{p_i}(y-\sum _j{\gamma }_j{p}_j)}$

where ${\displaystyle y}$ is total expenditure, and ${\displaystyle p_i}$ is the price of good ${\displaystyle i}$.

Intermediate Microeconomics Hal R Varian

The Stone–Geary utility function was first derived by Roy C. Geary,^[2] in a comment on earlier work by Lawrence Klein and Herman Rubin.^[3]Richard Stone was the first to estimate the Linear Expenditure System.^[4]

References[edit]

1. ^Varian, Hal (1992). 'Estimating consumer demands'. Microeconomic Analysis (Third ed.). New York: Norton. pp. 210–213 [p. 212]. ISBN0-393-95735-7.
2. ^Geary, Roy C. (1950). 'A Note on 'A Constant-Utility Index of the Cost of Living''. Review of Economic Studies. 18 (2): 65–66. JSTOR2296107.
3. ^Klein, L. R.; Rubin, H. (1947–8). 'A Constant-Utility Index of the Cost of Living'. Review of Economic Studies. 15 (2): 84–87. JSTOR2295996.Check date values in: |year= (help)
4. ^Stone, Richard (1954). 'Linear Expenditure Systems and Demand Analysis: An Application to the Pattern of British Demand'. Economic Journal. 64 (255): 511–527. JSTOR2227743.

Further reading[edit]

• Neary, J. Peter (1997). 'R.C. Geary's Contributions to Economic Theory'(PDF). In Conniffe, D. (ed.). R.C. Geary, 1893–1983: Irish Statistician. Dublin: Oak Tree Press. Archived from the original(PDF) on 2005-03-25.
• Silberberg, Eugene; Suen, Wing (2001). 'Empirical Estimation and Functional Forms'. The Structure of Economics: A Mathematical Analysis (Third ed.). Boston: Irwin McGraw-Hill. pp. 357–363. ISBN0-07-234352-4.

Hal Varian Intermediate Microeconomics Pdf

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