Abstract
This article approaches demand analysis in a probabilistic manner. The main ingredient is the value share (the proportion of total expenditure spent on a particular commodity), which can be regarded as a probability in view of the fact that it is nonnegative and adds up to one when summed over all commodities. This ingredient is used for the formulation of price and quantity index numbers and demand equations, partly in the light of information theory.
This article first appeared in Econometrica, 33 (1965), 67–87. Reprinted by permission of Elsevier Science Publishers B.V. (North Holland). The author is indebted to Messrs. C.T. Leenders and G.A.C. Beerens for their remarks on an earlier draft of this paper and their computational assistance.
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References
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© 1992 Springer Science+Business Media Dordrecht
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Theil, H. (1992). The Information Approach to Demand Analysis. In: Raj, B., Koerts, J. (eds) Henri Theil’s Contributions to Economics and Econometrics. Advanced Studies in Theoretical and Applied Econometrics, vol 25. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2408-9_3
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DOI: https://doi.org/10.1007/978-94-011-2408-9_3
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