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In addition, we should take into account the Giffen goods paradox, whereby food price increases can lead to changes in consumption behaviour.
Because all budget elasticities are greater than zero and all price elasticities are less than zero, it seems that no inferior or, God forbid, Giffen goods appears among the commodities purchased by New Zealand Households.
Hence, they suggest that empirical searches for Giffen goods focus on cases where two goods are chosen subject to two binding constraints.
Thus, Gilley and Karels [1991] claim, in essence, that the food which provides the most calories per dollar spent must be a Giffen good.
12 Katyal's insightful account of how the phenomenon of substitution can confound conventional deterrence prescriptions employs a host of innovative concepts -- including Giffen goods, income effects, and extremeness aversion -- that the new deterrence scholarship should aspire to appropriate.
Katyal's account of "Y-optimality" and Giffen goods also assumes something a good deal less intuitive, namely, that income effects will constrain the commission of diverse nonmarket crimes.
Thus Giffen goods continue to be viewed as theoretically possible but empirically unlikely.
Step-Optimization, Secondary Constraints, and Giffen Goods.
Therefore, some way consistent with neoclassical thought must be found to place theoretical restrictions on consumer behavior which rule out the possibility of Giffen goods.
On the one hand, Boland's tone would lead us to conclude that he is arguing on a priori grounds against the existence of Giffen goods and feels that this is a legitimate method of argument.
The second paper raises some philosophical issues concerning the definition of Giffen goods and the role of a second constraint in the utility-maximizing problem.
According to Boland, if demand theory cannot be revised to dismiss the theoretical possibility of a Giffen good, it should at least be able to explain why Giffen goods do not exist empirically.