Demand Conditions under Multidimensional Pricing

  • Lawrence H. Officer


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.


Demand Function Supply Curve Demand Condition Pure Competition Intermediate Vector 
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  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
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    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
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    Lancaster, Kelvin J., ‘A New Approach to Consumer Theory’, Journal of Political Economy, LXXIV (2) (April 1966) 132–57.CrossRefGoogle Scholar
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    Officer, Lawrence H., ‘The Optimality of Pure Competition in the Capacity Problem’, Quarterly Journal of Economics, LXXX (4) (November 1966) 647–51.CrossRefGoogle Scholar
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    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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