Shipping the Good Apples Out: Alchian-Allen Theorem of Various Qualities
This paper explores conditions for which Alchian-Allen theorem–the finer quality product is relatively more purchased than the lower one in regions where additional costs are imposed–holds in models of various but finite qualities. In this paper, “finer qualities raise ratios to lower ones in response to transportation costs” defines the various qualities version of Alchian-Allen theorem. Then we find Alchian-Allen theorem holds if and only if consumptions of neighbor qualities are not so different and weighted averages of compensated elasticities by inverse of prices are decreasing in qualities. In order to provide plausible intuitions, some sufficiency conditions are also suggested.
|Date of creation:||09 Sep 2006|
|Date of revision:||20 Nov 2006|
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- Irwin, Douglas A. & Temin, Peter, 2001.
"The Antebellum Tariff On Cotton Textiles Revisited,"
The Journal of Economic History,
Cambridge University Press, vol. 61(03), pages 777-798, September.
- Douglas A. Irwin & Peter Temin, 2000. "The Antebellum Tariff on Cotton Textiles Revisited," NBER Working Papers 7825, National Bureau of Economic Research, Inc.
- 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.
- Jonathan B. Pritchett & Richard M. Chamberlain, 1993. "Selection in the Market for Slaves: New Orleans, 1830–1860," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 461-473. Full references (including those not matched with items on IDEAS)
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