Posts Tagged ‘inferior goods’

The upside of income elasticity

December 9, 2008

While, as I discussed earlier, some product markets such as champagne are struggling in the wake of the current economic downturn, others seem to be holding up well. Melbourne newspaper The Age reports that local book retailers are faring better this Christmas than last.

So the income elasticity seems to be helping out here. Possibly books are inferior goods (i.e. sales go up as income drops). It is more likely that what we are seeing is consumers, conscious that their incomes are not rising or a little more uncertain, switching from more frivilous leisure goods (including champagne and travel) to more time-heavy commitments such as reading.

What other products might be experiencing such boosts in sales?