Saito, Tetsuya (2007): Shipping the Good Apples Out: Another Proof with A Graphical Representation.
Download (927kB) | Preview
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.
|Item Type:||MPRA Paper|
|Institution:||Department of Economics, SUNY at Buffalo|
|Original Title:||Shipping the Good Apples Out: Another Proof with A Graphical Representation|
|Keywords:||Fixed transportation cost; quality of goods; relative demand; Alchian-Allen theorem|
|Subjects:||D - Microeconomics > D0 - General > D00 - General
F - International Economics > F1 - Trade > F19 - Other
|Depositing User:||Tetsuya Saito|
|Date Deposited:||02. Jan 2007|
|Last Modified:||12. Feb 2013 18:08|
Alchian, A.A. and W. R. Allen. University Economics. Belmont, CA: Wadsworth, 1967. Bauman, Y. "Shipping the Good Apples Out: A New Perspective." Economic Inquiry 42 (2004): 534-36. Bertonazzi, E.P., M. T. Maloney, and R. E. McCormick. "Some Evidence on the Alchian and Allen Theorem: The Third Law of Demand?" Economic Inquiry 31, no. 383-393 (1993). Borcherding, T. E. and E. Silberberg. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered." Journal of Political Economy 86 (1978): 131-38. Gould, J. P. and J. Segall. "The Substitution Effects of Transportation Costs." Journal of Political Economy 77 (1969): 130-37. Hicks, J. R. Value and Capital. Oxford, UK: Clarendon Press, 1946. Irwin, D. A. and P. Temin. "The Antebellum Tariff on Cotton Textile Revisited." Journal of Economic History 61 (2001): 777-98. Razzolini, L., W. F. Shughart II, and R. D. Tollison. "On the Third Law of Demand." Economic Inquiry 41 (2003): 292-98. Staten, M. and J. Umbeck. "Shipping the Good Apples Out: The Effect of a Fixed Charge on Students." Journal of Economic Education 20 (1989): 165-71. Temin, P. "Product Quality and Vertical Integration in the Early Cotton Textile Industry." Journal of Economic History 48 (1988): 891-907. Umbeck, J. "Shipping the Good Apples Out: Some Ambiguities in the Interpretation of Fixed Charge." Journal of Political Economy 88 (1980): 199-208.