In a major work that is the culmination of over a decade of intensive
research, Werner Hildenbrand presents a new theory of market demand, the
principal aim of which is to identify the conditions under which the Law
of Demand holds true. Hildenbrand argues that the Law of Demand is due
mainly to the "heterogeneity" of the population of households. In his
view, "rationality" of individual behavior plays only a minor role.
While the traditional approach to the theory of market demand is to
analyze the question, To what extent are the postulated properties of
individual behavior preserved by going from individual to market
demand?, this book asks the question, Which properties of the market
demand function are created by the aggregation process?.
Two hypotheses on the population of households play a key role in
Hilden-brand's thinking. The first is the "increasing dispersion" and
the second the "increasing spread" of households' demand. These
hypotheses can easily be interpreted and are a priori plausible. For a
positive theory of market demand, according to Hildenbrand, it is more
important that the hypotheses are well supported by empirical evidence.
His claims in this important new book are based on a nonparametric
statistical data analysis of the U.K. Family Expenditure Survey and the
French Enquête Budget de Famille.
Originally published in 1994.
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