Munich Personal RePEc Archive

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

Saito, Tetsuya (2007): Shipping the Good Apples Out: Another Proof with A Graphical Representation.

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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.

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