Shipping the Good Apples Out: Alchian-Allen Theorem of Various Qualities

Tetsuya Saito

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Alchian-Allen theorem; various qualities; substitution effect; fixed transportation cost (search for similar items in EconPapers)
JEL-codes: D00 F19 (search for similar items in EconPapers)
Date: 2006-09-09, Revised 2006-11-20
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/883/1/MPRA_paper_883.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/901/1/MPRA_paper_901.pdf revised version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:883

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().