Utility foundation of a Cobb-Douglas demand function with more than two attributes, consumer surplus and social welfare computation

ABSTRACT

The utility foundation of the Cobb-Douglas demand function is known for the one and two attributes cases. It is unknown in the case of three or more attributes, a regular need for modellers. In this article, we contribute by founding from a programme of (quasi-linear) utility maximization a Cobb-Douglas demand function of an arbitrary large number of attributes. We also contribute by providing simple formulas for consumer surplus and social welfare. By generalizing previous results, our research offers a normative foundation to a larger class of demand functions.

KEYWORDS:

• Utility theory
• Cobb-Douglas demand function
• quasi-linear utility function
• utility foundation
• multi-attributes

JEL CLASSIFICATION:

• D00
• D11
• D60

Acknowledgements

Stanko Dimitrov acknowledges funding from the Natural Sciences and Engineering Research Council of Canada for partially supporting this work.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The authors thank an anonymous reviewer for suggesting this generalization.

Additional information

Funding

The work was supported by the Natural Sciences and Engineering Research Council of Canada.