A New Exploration into Market Demand Model
Based on cardinal utility theory and ordinal utility theory which can be considered as the foundation stone of modern mainstream microeconomics theory,the model of product market demand curve implies unpractical hypotheses and neglects the effects of customers money income structure,as a result,the model has limitations when used to explain economic phenomenon in the real world,and will misguide the decision-making of producers and the constitution of microeconomic policies. This paper initially analyzed the case and then discussed the hypotheses in cardinal utility and ordinal utility,that is,the infinite-divisibility of product,the existence of diminishing marginal utility curve,the existence of the law of diminishing marginal utility curve,the influence of the price of product change on the demand of individual customer,customer equilibrium conditions,and the substitutability between products with different functions. Its conclusions were summarized as follows. First of all,in essence there is no difference between cardinal utility theory and the ordinal utility theory. Cardinal utility theory constructs consumer product demand curve model on the law of diminishing marginal utility,and ordinal utility theory construct it on the law of diminishing marginal rate of substitution. The law of diminishing marginal substitution rate is only the deduction of the law of diminishing marginal utility. Second,the practical value of product demand model constructed in modem microeconomics is arguable for reasons as follows. The first reason is the non-infinite- divisibility of product and high transaction costs. The second reason is that as for individual customer there is no influence of the price of product change on the demand of most products. The third reason is that the law of diminishing marginal utility is only single psychological phenomenon,not a universal rule. The fourth reason is that there are not customer equilibrium conditions in reality. The last reason is that there is non-substitutability between products with different functions.
cardinal utility theory ordinal utility theory law of diminishing marginal utility
Xiao Zheng-zai Zhang Tao
Xiangtan University,P. R. China 411105 School of Economics and Management,Beijing Jiaotong Universit School of Economics and Management,Beijing Jiaotong University,P. R. China 100044
国际会议
The First International Conference on Management Innovation(ICMI 2007)(管理创新会议)
上海
英文
1114-1119
2007-06-04（万方平台首次上网日期，不代表论文的发表时间）