Alchian-Allen and Big Box Stores
Posted in Price System, Regulation on Jun 18th, 2010
A simple presentation of the Alchian-Allen theorem is that if you take two goods with different prices and you add a fixed cost to each of them, then the “more expensive” good becomes relatively less expensive. Here is a simple illustration: Suppose we have two types of booze: White Lightning Bourbon, which costs $8.00 per […]
