Utility foundation of a Cobb-Douglas demand function with two attributes

ABSTRACT

It is known how to derive, from a utility maximization programme, a Cobb-Douglas demand function depending on the sole product price. This article shows how to derive a Cobb-Douglas demand function, which depends on both the product price and quality. More broadly, it offers a normative foundation, with a quasi-linear utility function, to the use of a Cobb-Douglas demand function of two attributes. It also provides simple measures of consumer surplus and social welfare.

Key words:

• Cobb-Douglas
• demand function
• quasi-linear utility
• normative foundation

Code JEL:

• D01
• D11
• D60

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ We thank an anonymous reviewer for this clarification.