<p>I was reading an article on Becker Social Pricing, where your demand for a good depends on other people's demand for the good. So basically <a href="https://fbaum.unc.edu/teaching/PLSC541_Fall06/Becker%20JPE%201991.pdf" rel="nofollow noreferrer">this paper</a> is meant to be a primer into explaining why some places price in such a way that they have chronic shortages (think of big concerts or popular restaurants). I think the idea is that seeing many people want to attend this event actually is part of what contributes to this high demand for the good, and the demand is not convex.</p>
<p>Since demand is not convex, as in Walrasian smooth demand, (if of course I am interpreting this model correctly), then how do utility maximization problems work here, say, if we had two goods that followed this model? Assuming we still have Kuhn-Tucker sufficiency, would we just set up a Lagrangian as normal, or are there some stronger conditions we need to make sure a maximum exists?</p>

CC BY-SA 3.0
2015-10-13T05:21:10.170Z
I could not find a mention of utility anywhere in this paper. Could you elaborate on what you mean by utility maximization? Is it consumer surplus maximization?
Giskard
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2015-10-13T13:54:21.700Z
My question about utility is an extension of the paper. The paper itself doesn't talk about utility, and is very short.
Kitsune Cavalry
<utility><pricing><walrasian>
Becker Social Pricing and Lack of Smooth Demand
Kitsune Cavalry
# Becker Social Pricing and Lack of Smooth Demand

(Asked by: username_0 on 2015-10-13)

I was reading an article on Becker Social Pricing, where your demand for a good depends on other people's demand for the good. So basically [this paper](https://fbaum.unc.edu/teaching/PLSC541_Fall06/Becker%20JPE%201991.pdf) is meant to be a primer into explaining why some places price in such a way that they have chronic shortages (think of big concerts or popular restaurants). I think the idea is that seeing many people want to attend this event actually is part of what contributes to this high demand for the good, and the demand is not convex.

Since demand is not convex, as in Walrasian smooth demand, (if of course I am interpreting this model correctly), then how do utility maximization problems work here, say, if we had two goods that followed this model? Assuming we still have Kuhn-Tucker sufficiency, would we just set up a Lagrangian as normal, or are there some stronger conditions we need to make sure a maximum exists?

**Tags:** utility, pricing, walrasian
> **Comments:**
> **username_1**: I could not find a mention of utility anywhere in this paper. Could you elaborate on what you mean by utility maximization? Is it consumer surplus maximization?  
> **username_0**: My question about utility is an extension of the paper. The paper itself doesn't talk about utility, and is very short.  

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## 0 answers

