What is Giffen goods?




Giffen goods is the goods whose demand decrease when its price decrease.
The goods whose demand increase when its price increase define "Giffen goods no.2" in here.
I suppose that the occurence of Giffen goods have the following background:
The price of potato rose in the Great Britain.So customers judged the quantity of potato which appear on the market is short.The potato is the necessities of life,and it is foods of which must consume every day.They must buy before it run out in market.Therefore the demand of the potato increased.Giffen saw only the phenomenon and then reported that the potato increase when its price rise.

Universally the condition of Giffen goods no.2 will be following:
(1)It is the goods that customer must buy it.(necessary good)
(2)It is the goods whose price rise or run short with the passage of time.

The condition which is approximate to (1) is following:
(1') It can make a profit by selling it.

Also the condition of Giffen goods will be following:
(1)It is the goods that the customer don't have to buy it at once.
(2)The price of it decrease with the passage of time.


If the percentage of self-sufficient of foods is low and the foods can't import,the foods in a certain country will become Giffen goods no.2.






Return