Smoothing Demand by Aggregation with Respect to Wealth

We sugges! in this paper to treat the problem of smoothing demand by aggregation in a two-step procedure, corresponding to the two different constituents of consumption characteristics. wealth and preferences. Instead of imposing a manifold structure on preferences we exploit the nice structure of wealth-space. The first step of this procedure, aggregation with respect to wealth. is carried out. It is shown th!at, for any preference, aggregation with respect to wealth yields a mean demand which is almost everywhere Ct. Moreover, it is shown that for an important class of preferences, vanishing Gaussian curvature of indifference surfaces does not destroy differentiab!!ity of the mean demand function.