Preference-Theoretic Weak Complementarity: Getting More With Less
Source: Louisiana State University
A preference-theoretic characterization of weak complementarity is provided based on an explicit representation of revealed preference. Weak complementarity is defined in terms of the observable property of nonessentiality and the unobservable property of no existence value. Preference-theoretic characterizations of these properties facilitate a precision and intuition that is not generally available within the existing calculus-based literature. An exact welfare measure is specified that does not require a continuous nonmarket good or monotonic preference on the nonmarket good, and which can be easily generalized to accommodate infinite choke prices.