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Shipping the Good Apples Out: Another Proof with A Graphical Representation

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  • Saito, Tetsuya
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    Abstract

    This paper provides a proof of Alchian and Allen’s thesis—superior good is relatively more consumed in distant market—with some restrictions on the utility function. Comparing to the proof by Borcherding and Silberberg (1978), those assumptions may restrict the model in some sense but we will find the Alchian-Allen theorem is independent of the third law of Hicks (Hicks 1946, pp. 309-311). The theorem is given by natural characteristics of relative demand curves.

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    File URL: http://mpra.ub.uni-muenchen.de/1297/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1297.

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    Date of creation: 01 Jan 2007
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    Handle: RePEc:pra:mprapa:1297

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    Related research

    Keywords: Fixed transportation cost; quality of goods; relative demand; Alchian-Allen theorem;

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    1. repec:cup:jechis:v:61:y:2002:i:03:p:777-798_03 is not listed on IDEAS
    2. Laura Razzolini & William F. Shughart & Robert D. Tollison, 2003. "On the Third Law of Demand," Economic Inquiry, Western Economic Association International, vol. 41(2), pages 292-298, April.
    3. Gould, John P & Segall, Joel, 1969. "The Substitution Effects of Transportation Costs," Journal of Political Economy, University of Chicago Press, vol. 77(1), pages 130-37, Jan./Feb..
    4. Douglas A. Irwin & Peter Temin, 2000. "The Antebellum Tariff on Cotton Textiles Revisited," NBER Working Papers 7825, National Bureau of Economic Research, Inc.
    5. Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-38, February.
    6. Bertonazzi, Eric P & Maloney, Michael T & McCormick, Robert E, 1993. "Some Evidence on the Alchian and Allen Theorem: The Third Law of Demand?," Economic Inquiry, Western Economic Association International, vol. 31(3), pages 383-93, July.
    7. Temin, Peter, 1988. "Product Quality and Vertical Integration in the Early Cotton Textile Industry," The Journal of Economic History, Cambridge University Press, vol. 48(04), pages 891-907, December.
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