The Demand Curves for Giffen Goods are Downward Sloping
AbstractConsumers' optimal consumption strategy in anticipation of price variations is to equalize the marginal utility of income across different price regimes. Since the marginal utility of income is positively related to the price of a Giffen good, consumers will adopt a consumption plan (through saving and borrowing, insurance, or an appropriate choice of portfolio) that allows them to increase total expenditure when the Giffen good is relatively expensive and to reduce total expenditure when the Giffen good is relatively cheap. Giffen goods being inferior goods, this optimal choice of total expenditures will produce an income effect that reinforces the substitution effect, thus resulting in a downward sloping demand curve. Copyright 1992 by Royal Economic Society.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Department of Economics at the University of Washington in its series Discussion Papers in Economics at the University of Washington with number 91-18.
Length: 15 pages
Date of creation: 1991
Date of revision:
consumption ; prices ; income ; credit;
Other versions of this item:
- Barzel, Yoram & Suen, Wing, 1992. "The Demand Curves for Giffen Goods Are Downward Sloping," Economic Journal, Royal Economic Society, vol. 102(413), pages 896-905, July.
- Barzel, Y. & Suen, W., 1991. "The Demand Curves for Giffen Goods are Downward Sloping," Working Papers 91-18, University of Washington, Department of Economics.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Di Vita, Giuseppe, 2001. "Are the outputs derived from secondary materials giffen goods?," Resources Policy, Elsevier, vol. 27(4), pages 255-260, December.
- Simon GB Cowan & Simon Cowan, 2002. "Marginal Cost Pricing versus Insurance," Economics Series Working Papers 102, University of Oxford, Department of Economics.
- Giacomo Corneo & Olivier Jeanne, 1994. "Conspicuous Consumption and the Existence of Upward Sloping Demand Curves," Discussion Paper Serie A 461, University of Bonn, Germany.
- Wilfred Amaldoss & Sanjay Jain, 2002. "An Analysis of the Impact of Social Factors on Purchase Behavior," Review of Marketing Science Working Papers 2-1-1021, Berkeley Electronic Press.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.