> the Alchian–Allen theorem
Uhm, I'm not an economist but how is this a "theorem"? What is the theory, what are the axioms, where is the proof? This seems like an empirically observed trend.
Uhm, I'm not an economist but how is this a "theorem"? What is the theory, what are the axioms, where is the proof? This seems like an empirically observed trend.
[0] https://mpra.ub.uni-muenchen.de/901/1/MPRA_paper_901.pdf
"the harder the punishment, the harder the drug" is another very important non-trivial observation, missed by most people.
Did you read my comment? That's exactly what I wrote. This is not a "theorem". Theorems live inside theories, they're logically implied by axioms of the theories. That basic arithmetic proves nothing of the sort.
Since the whole theory won't fit in one wikipedia article, I suggest you read the first chapters or either a) Mas-Collel, Whinston and Green or b) Kreps, Microeconomic Foundations I (not the old undergrad book from him)
This would provide you with the theory to understand this result in a more mathematical correct way.
axioms: * given same price, consumer goes for higher grade product. * as relative price difference decreases, some consumers start going for higher grade product. * rules of arithmetic.
in any case, it seems that we have appreciation for different things. you prefer detailed verbosity, i prefer a simple idea that can be easily understood.
great and profound ideas are not necessarily complex, many of them are quite simple. let's keep them that way.