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

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  • Saito, Tetsuya

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.

Suggested Citation

  • Saito, Tetsuya, 2007. "Shipping the Good Apples Out: Another Proof with A Graphical Representation," MPRA Paper 1297, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1297
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    File URL: https://mpra.ub.uni-muenchen.de/1297/1/MPRA_paper_1297.pdf
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    References listed on IDEAS

    as
    1. Gould, John P & Segall, Joel, 1969. "The Substitution Effects of Transportation Costs," Journal of Political Economy, University of Chicago Press, vol. 77(1), pages 130-137, Jan./Feb..
    2. Irwin, Douglas A. & Temin, Peter, 2001. "The Antebellum Tariff On Cotton Textiles Revisited," The Journal of Economic History, Cambridge University Press, vol. 61(3), pages 777-798, September.
    3. repec:cup:jechis:v:61:y:2002:i:03:p:777-798_03 is not listed on IDEAS
    4. Peter Temin, 1988. "Vertical Integration and Product Quality in the Early Cotton Textile Industry," Working papers 481, Massachusetts Institute of Technology (MIT), Department of Economics.
    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 131-138, February.
    6. 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.
    7. Peter Temin, 1988. "Vertical Integration and Product Quality in the Early Cotton Textile Industry," Working papers 477, Massachusetts Institute of Technology (MIT), Department of Economics.
    8. Temin, Peter, 1988. "Product Quality and Vertical Integration in the Early Cotton Textile Industry," The Journal of Economic History, Cambridge University Press, vol. 48(4), pages 891-907, December.
    9. 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 383-393, July.
    10. Yoram Bauman, 2004. "Shipping the Good Apples Out: A New Perspective," Economic Inquiry, Western Economic Association International, vol. 42(3), pages 534-536, July.
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    More about this item

    Keywords

    Fixed transportation cost; quality of goods; relative demand; Alchian-Allen theorem;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • F19 - International Economics - - Trade - - - Other

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