30 April, 2008
Is Walmart a Giffen Good?
A Giffen Good is the Holy Grail of consumer theory--it theoretically exists, but it has never really been identified in practice. A Giffen Good is defined by an upward sloping demand curve. That is, as price increases, demand increases. The requisite criteria for a Giffen Good is that it be inferior and comprise a large portion of total consumption (not to be confused with a Veblen or snob good). So, if the price of the average bundle of goods purchased at Walmart increased, would the average Walmart shopper start having to shop there more?
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2 comments:
To find out if the WalMart bundle is a Giffen good, I think we would need to know the the availability of an alternative bundle, as well as a list of other items that WalMart regulars purchase that are not included in the Giffen bundle. Knowing the other things I, or I mean they, purchase would help us know if purchasing more of the Giffen Bundle will make up for purchasing less of all the other products.
This list is just a start of those other products:
NASCAR memorabilia
Chia Pets
Alimony
Blue Ribbon
Duct Tape
Camouflaged clothing
Paintball supplies
Post Season Holiday Candy, 9 times a year
WWF Memorabilia
Lotto Ticket
**Correction** After starting the list, I realized that all of these items are probably included in the average WalMart Giffen bundle. Sorry for the dead end KLR. Is there anything that is not included in the necessities that cannot be purchased at Wallyworld?
Big Gulps. That is a necessity that cannot be purchased at WalMart.
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