Revealed homothetic preference and technology

Using the revealed preference approach (Samuelson, P.A. (1938): A Note on the pure theory of consumer's behavior, Economica, 5, 61-71; Houthakker, H. (1950): Revealed preference and the utility function, Economica, 17, 159-174), we obtain a new axiom that completely characterizes the consumer demand behavior generated by homothetic preferences. This axiom provides a unified basis for sharpening previous theorems on homothetic rationalizations: it relaxes Chipman's (Chipman, J.S. (1974): Homothetic preferences and aggregation, Journal of Economic Theory, 8, 26-38) differentiability assumption on demand functions, and strengthens Varian's (Varian, H.R. (1983): Non-parametric tests of consumer behavior, Review of Economic Studies, 50: 99-110) rationalization notion into a stronger one (cf. Richter, M.K. (1966): Revealed preference theory, Econometrica, 34, 635-645). Our approach is also useful for homothetic production analysis; fbr example, it allows us to sharpen Varian's (Varian, H.R. (1984): The non-parametric approach to production analysis, Econometrica, 52, 579-597) (non-parametric) theorem in several directions (stronger rationalization notion, fewer attributes of observations). (C) 2000 Elsevier Science S.A. All rights reserved. JEL classification: D11; D21; C14.