UTILITY-FUNCTIONS AND GLOBAL REGULARITY OF FRACTIONAL DEMAND SYSTEMS

Fractional demand systems are utility derived demands having quantitie s or budget shares proportional to ag + bf, where g and f are function s of income and a and b vary across goods and are functions of prices. Many known demand systems that have large regular regions are fractio nal. This paper derives the indirect utility functions that generate a ll fractional demand systems, shows that these systems can all have la rge regular regions, and provides sufficient conditions for their glob al or nearly global regularity. An extension to rank three fractional demands is provided.