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difference Roy's identity and shepherd's lemma

difference Roy's identity and shepherd's lemma

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Answer #1

Shephards Lemma :

  • Named after Ronald Shephard
  • Major results in micro economics
  • Applications : theory of the firm and customer choice
  • It states that if indifference curves of expenditure or cost function are convex then the cost minimizing point of given good 'I' with price pi is unique
  • Gives a relationship between expenditure functions and Hicksian demand

Roys identity :

  • Named after French economist Rene Roy
  • Major results in micro economy
  • It relates ordinary demand function to the derivatives of indirect utility function
  • Reformulates shepherds lemma
  • Gives a method of deriving the marshallian demand function of a good for some consumer from indirect utility function of that consumer
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