Substitution Theory

Discipline: Economics

A fundamental part of modern economic theory developed by, among others, Soviet economist Eugen Slutsky (1880-1948) and English economist John Hicks (1904-1989); substitution theory is the analysis of the manner in which consumers, faced with a constant level of real income, change purchasing decisions in the wake of price changes.

Also see: Slutsky's theorem

J R Hicks and R G D Allen, 'A Reconsideration of the Theory of Value', Econometrica NS (1934), 52-76, 196-219


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