Alchian–Allen effect
id:
alchian-allen-effect-241-6965373
title:
Alchian–Allen effect
text:
The Alchian–Allen effect was described in 1964 by Armen Alchian and William R Allen in the book University Economics. It states that when the prices of two substitute goods, such as high and low grades of the same product, are both increased by a fixed per-unit amount such as a transportation cost or a lump-sum tax, consumption will shift toward the higher-grade product. This is because the added per-unit amount decreases the relative price of the higher-grade product. Suppose, for example, that
brand slug:
wiki
category slug:
encyclopedia
description:
Per-unit costs favor high-grade goods
original url:
https://en.wikipedia.org/wiki/Alchian%E2%80%93Allen_effect
date created:
date modified:
2024-01-24T21:19:00Z
main entity:
{"identifier":"Q4713046","url":"https://www.wikidata.org/entity/Q4713046"}
image:
fields total:
13
integrity:
14