Giffen good


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Related to Giffen good: Engel curve
General equilibrium analysisclick for a larger image
Fig. 81 General equilibrium analysis. An increase in the price of oil is likely to increase the cost structures of many other industrial sectors, and hence serve to raise the general price level and related wage rates. This increase in prices and wages, in turn, increases input costs to the oil industry.

Giffen good

a GOOD for which quantity demanded increases as its PRICE increases, rather than falls, as predicted by the general theory of DEMAND. It applies only in the highly exceptional case of a good (see INFERIOR PRODUCT) that accounts for such a high proportion of households’ budgets that an increase in price produces a large negative INCOME EFFECT, which completely overcomes the normal SUBSTITUTION EFFECT. See PRICE EFFECT, UPWARD-SLOPING DEMAND CURVE.
References in periodicals archive ?
Despite the theory, it's difficult to identify a real-world case of a Giffen good.
Robson, 1981, Insurance as a Giffen Good, Economics Letters, 8: 47-51.
However, an individual with DARA might treat insurance as a Giffen good (3) when the income effect exceeds the substitution effect.
Let a consumer consume two goods and let Good 1 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.
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.
Facing this difficulty, Briys, Dionne, and Eeckhoudt (1989) have only attempted to reinvestigate Hoy and Robson's (1981) result for insurance to be a Giffen good under the special case of a two-state risk.
Furthermore, each good with a downward-sloping demand curve must have at least one gross substitute and each Giffen good - if there are any - must have at least one gross complement.
First, if the consumer is subject to a single constraint, as he is in Hicksian utility theory, it is indeed true that an upward-sloping demand curve characterizes a Giffen good.
Hoy, Michael and Arthur Robson, "Insurance as a Giffen Good.
Experimental Confirmation of the Existence of a Giffen Good.
Contrary to the well-known result obtained in the standard static model, insurance may not be a Giffen good in the sense that a transitory increase in the loading factor of insurance always reduces the demand for insurance in the short run, under risk aversion alone.