On inferring individual behaviour from market behaviour in a predetermined quantities model

This article develops the theoretical basis of individual behaviour recovered from market behaviour in a predetermined quantities model. As applied economists argue, an inverse demand system may be empirically sound within the framework of classical demand theory. However, it should not lead to the conclusion that the market responses for changes in quantity should be used to see welfare effects instead of the individual responses by price changes as far as the market is concerned. It shows theoretically and empirically how individual responses can be recovered from market responses in a predetermined quantities model. It suggests that the fundamental results of this article should be used on interpreting empirical results from the predetermined quantities models.