An Expository Note on Alchian-Allen Theorem When Sub-Utility Functions are Homogeneous of Degree n ą 0
AbstractThis expository note shows Alchian and Allen’s conjecture–consumers purchase fine quality relatively more than coarse one– is true under some specific conditions about homogeneity, inner solution and substitutability while allowing the influence of the income effect. In the proof, to be an exposition, I emphasize graphical representations of Alchian-Allen Theorem than algebra.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6442.
Date of creation: 21 Dec 2007
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Fixed transaction cost; quality of goods; Alchian-Allen Theorem; change in consumption pattern;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
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