Giffen Paradox

• after Robert Giffen
• a good affected by this phenomenon is called a Giffen Good
  • in German: “Goschen Gut” or “Giffen Gut”
• a good becomes cheaper → increased demand
• relative income increases therefore
• increased relative income → negative effect in demand
• negative effect in demand > increased demand due to cheaper prices
• one example: rice in Asia
  • as people get relatively richer, they consume less rice