The Generalized Alchian-Allen Theorem

Junichi Minagawa and Thorsten Upmann

No 3969, CESifo Working Paper Series from CESifo

Abstract: The Alchian-Allen substitution theorem states that an increase of the prices of two similar goods by the same amount leads to a relative increase in the compensated demand of the more expensive good. In this paper we generalize this theorem to ordinary demand functions and show under which conditions the Alchian-Allen result continues to hold when income and endowment effects are taken into account.

Keywords: The Alchian-Allen theorem; income and endowment effects (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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