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Demand Conditions under Multidimensional Pricing

  • Lawrence H. Officer

Abstract

The unidimensional nature of microeconomic analysis has been subjected recently to long-overdue criticism, on the grounds of its distance from reality.1 It is stressed by critics that a product should be defined not in terms of a one-dimensional unit of measurement but rather in terms of its attributes, aspects or characteristics which generally are multidimensional. Nevertheless, this ‘abstract-product’ approach, to use Baumol’s terminology, remains in a primitive state. Advances have been most noteworthy in the theory of consumer demand. Yet even the most elegant studies in this field — those of Baumol [1] and Lancaster [3] — suffer from oversimplified models. Thus Baumol [1, p. 682] must resort to artificial devices to cope with his assumption of completely inelastic demand for any one consumer, and Lancaster makes the strong assumption that the characteristics of a product are identical for all consumers. Quite apart from unrealistic assumptions, however, their models suffer a fundamental deficiency: pricing according to attributes, i.e. multidimensional pricing is not considered.

Keywords

Demand Function Supply Curve Demand Condition Pure Competition Intermediate Vector 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. [1]
    Baumol, William J., ‘Calculation of Optimal Product and Retailer Characteristics: The Abstract Product Approach’, Journal of Political Economy, LXXV (5) (October 1967) 674–85.CrossRefGoogle Scholar
  2. [2]
    Crew, Michael A., ‘The Optimality of Pure Competition in the Capacity Problem: Further Comment’, Quarterly Journal of Economics, LXXXIII (2) (May 1969) 341–3.CrossRefGoogle Scholar
  3. [3]
    Lancaster, Kelvin J., ‘A New Approach to Consumer Theory’, Journal of Political Economy, LXXIV (2) (April 1966) 132–57.CrossRefGoogle Scholar
  4. [4]
    Officer, Lawrence H., ‘The Optimality of Pure Competition in the Capacity Problem’, Quarterly Journal of Economics, LXXX (4) (November 1966) 647–51.CrossRefGoogle Scholar
  5. [5]
    Simmonds, Kenneth, ‘Making Micro-Economics Multi-Dimensional’, Journal of Industrial Economics, XVII (1) (November 1968) 18–28.CrossRefGoogle Scholar

Copyright information

© Lawrence H. Officer 1974

Authors and Affiliations

  • Lawrence H. Officer
    • 1
  1. 1.Michigan State UniversityUSA

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