In economics and consumer theory, a Geffen good is one which people paradoxically consume more of as the price rises, violating the law of demand. In normal situations, as the price of a good rises, the substitution effect causes consumers to purchase less of it and more of substitute goods. In the Geffen good situation, the income effect dominates, leading people to buy more of the good, even as its price rises. Evidence for the existence of Geffen goods is limited, but microeconomic mathematical models explain how such a thing could exist. Geffen goods are named after Scottish economist Sir Robert Geffen, to whom Alfred Marshall attributed this idea in his book Principles of Economics. Geffen first proposed the paradox from his observations of the purchasing habits of the Victorian era poor.
An
example At
this point, the consumer’s entire budget is taken up by the Geffen good, so any
price increase now will result in a decrease of the amount of good the consumer
is able to buy. Thus, we will have our typical downward sloping demand
curve.