Why Market Imperatives Invigorate Economic Inequality? Cobb-Douglas Utility Remodelled
The aim of the article is to demonstrate on a familiar example of Cobb-Douglas utility function principles of intertemporal resource allocation under general market conditions. The enormous increase of data availability and progress in data analysis in recent decades caused that empirical inequality research has created a robust base of results. On the other hand, researchers face serious interpretation difficulties. Empirical results do not speak for themselves but only through interpretative theory. Hence, the article provides a theoretical scheme which clarifies fundamental inequality-driving forces and which reveals economic inequalities as the intrinsic feature of market economies.
Keywords: Cobb-Douglas utility, Economic inequality, Market forces.
JEL: D01, D6, D3, D41.