Does an Increase in the Price of a Necessity Reduce Welfare More than an Equivalent Increase in the Price of a Luxury?

Does an Increase in the Price of a Necessity Reduce Welfare More than an Equivalent Increase in the Price of a Luxury?

Regular price $20.00 $20.00 Sale

This paper develops an argument to suggest that the price increase that causes the greater decrease in welfare is independent of which good is a "necessity," if necessity is interpreted as low-income or low-price elasticity. A simple two-commodity mo...