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Consumption externalities and upward-sloping demand

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  • David Yeung

Abstract

The law of demand states that individual demand curves are negatively sloped. To date, the Giffen Paradox represents the only analytically valid exception to the law under standard assumptions. This article shows that if consumption externalities exist, it is possible for the individual's demand curve to slope upward. In particular, the condition under which demand becomes upward-sloping can be delineated in terms of measures of elasticity of demand. Copyright International Atlantic Economic Society 2002

Suggested Citation

  • David Yeung, 2002. "Consumption externalities and upward-sloping demand," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 8(3), pages 196-200, August.
    • Handle: RePEc:kap:iaecre:v:8:y:2002:i:3:p:196-200:10.1007/bf02297957
    DOI: 10.1007/BF02297957
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    1. George J. Stigler, 1947. "Notes on the History of the Giffen Paradox," Journal of Political Economy, University of Chicago Press, vol. 55, pages 152-152.
    2. Charles R. Plott & Jared Smith, 1999. "Instability of Equilibria in Experimental Markets: Upward-Sloping Demands, Externalities, and Fad-Like Incentives," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 405-426, January.
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    Cited by:

    1. Emanuela Randon & Peter Simmons, 2010. "Strategic Consumption Complementarities: Can Price Flexibility Eliminate Inefficiencies and Instability?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 249-279, April.

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