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IN SEARCH OF GIFFEN BEHAVIOR
Author(s) -
Gilley Otis W.,
Karels Gordon V.
Publication year - 1991
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1991.tb01264.x
Subject(s) - economics , constraint (computer aided design) , rationing , mathematical economics , set (abstract data type) , contrast (vision) , budget constraint , microeconomics , mathematics , computer science , health care , geometry , artificial intelligence , programming language , economic growth
This paper develops a theory of Giffen behavior that results from a second rationing constraint. In contrast to standard analysis, this approach is virtually independent of the specific form of consumer preferences. The effect is first developed in a two‐good world along with an example, then extended to a more general case to determine if the effect vanishes as the choice set is expanded. The results demonstrate that Giffen behavior is plausible when a second rationing constraint applies and, furthermore, adding additional goods to the choice set does not necessarily cause the effect to vanish.