How to Construct Demand Curves? Austrians and the Neoclassicals

This paper compares how Austrian and neoclassical economics construct demand curves and examines the fundamental differences in their approaches to utility theory and price determination. It aims to clarify both standpoints by highlighting how distinct foundational assumptions – such as the treatment of money, the homogeneity of goods, and the role of indifference – give rise to different forms of demand curves. The analysis further shows that the Austrian construction can potentially account for Giffen behavior without resorting to an upward-sloping demand curve. Finally, the paper revisits (Hudík, Marek. 2011. “Rothbardian Demand: A Critique.” The Review of Austrian Economics 24: 311–8) critique of Rothbardian demand, demonstrating that it rests on a set of assumptions different from those underlying standard Austrian theory.