DOES AN INCREASE IN THE PRICE OF A NECESSITY REDUCE WELFARE MORE THAN AN EQUIVALENT INCREASE IN THE PRICE OF A LUXURY,
Abstract
Consideration is given to the question of whether it is correct to suppose that an increase in the cost of a necessity reduces welfare more than an equivalent price increase in another commodity. It is shown that the answer is no -- the price increase which causes the greater decrease in welfare is independent of which good is a 'necessity,' if necessity is given any usual meaning such as low income elasticity or low price elasticity.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 01, 1970
- Accession Number
- AD0702620
Entities
People
- Joseph P. Newhouse
Organizations
- RAND Corporation