Abstract
Aggregation theory of demand aims at identifying observable explanatory variables for aggregate demand starting from a microeconomic description of the underlying population of households. In the simple case, where the demand decision of a household is the choice of a commodity vector in a budget set, which is determined by the price vector p and income x (total expenditure), the demand behaviour of a household h is modelled by a demand function ##INLINE EQUATION## (commodity space), which is defined for every strictly positive price vector ##INLINE EQUATION## and every income level ##INLINE EQUATION##. The demand function ##INLINE EQUATION## might, but need not be derived from preference maximization under the budget constraint.
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Hildenbrand, W. (2008). Aggregation (Theory). In: Durlauf, S.N., Blume, L.E. (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-58802-2_20
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DOI: https://doi.org/10.1007/978-1-349-58802-2_20
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