Abstract
Evolutionary economics badly needs a behavioral theory of household consumption behavior, but to date only limited progress has been made on that front. Partly because Schumpeter’s own writings were focused there, and partly because this has been the focus of most of the more recent empirical work on technological change, modern evolutionary economists have focused on the “supply side”. However, because a significant portion of the innovation going on in capitalist countries has been in the form of new consumer goods and services, it should be obvious that dealing coherently with the Schumpeterian agenda requires a theory which treats in a realistic way how consumers respond to new goods and services. The purpose of this essay is to map out a broad alternative to the neoclassical theory of consumer behavior.
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Notes
Becker (1962) presents an argument that responses to a price change induced by a shift in the budget constraint are alone sufficient to induce downward sloping demand curves. The argument we present here involves a much richer characterization of the processes involved in the responses to changed prices.
Here we draw a parallel with the notion of complementarity across constituent activities of consumption put forth by Menger (1950).
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Acknowledgements
We are grateful for the helpful comments on an earlier draft of this paper given by Marina Bianchi, Stan Metcalfe, Morris Teubal and Ulrich Witt.
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Nelson, R.R., Consoli, D. An evolutionary theory of household consumption behavior. J Evol Econ 20, 665–687 (2010). https://doi.org/10.1007/s00191-010-0171-7
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DOI: https://doi.org/10.1007/s00191-010-0171-7