Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/65851 
Year of Publication: 
2012
Series/Report no.: 
CESifo Working Paper No. 3969
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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.
Subjects: 
the Alchian-Allen theorem
income and endowment effects
JEL: 
D11
Document Type: 
Working Paper
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