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SUFFICIENT CONDITIONS FOR NEGATIVE EXPONENTIAL DENSITIES A FURTHER ANALYSIS
Author(s) -
Kim KyungHwan,
McDonald John F.
Publication year - 1987
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1987.tb01161.x
Subject(s) - unitary state , exponential function , economics , econometrics , price elasticity of demand , elasticity (physics) , income elasticity of demand , mathematical economics , mathematics , microeconomics , physics , mathematical analysis , law , thermodynamics , political science
ABSTRACT Brueckner correctly pointed out that one of the sufficient conditions for negative exponential densities is a unitary price elasticity of the compensated, not the uncompensated, demand for housing. This note shows that the Brueckner condition implies a zero income elasticity of housing demand when income and price elasticities are constrained to be constants. It also derives the utility function that gives rise to negative exponential densities in this case, given that other standard assumptions are satisfied. In light of empirical evidence, justification for the popular negative exponential functional form seems rather weak.