
doi: 10.1086/259500
When a commodity is consumed at the production center and also at various distances from the center, it is alleged that the amount shipped for consumption will contain a greater proportion of high-quality output than will be found in the amount kept for consumption at the production center. It is said, for example, that New Yorkers consume a greater proportion of good oranges than do Californians, that Asians import a greater proportion of expensive American cars than do consuming areas closer to Detroit, that "seconds" are more heavily consumed near the place of manufacture than farther away, and that one must be more careful in buying Italian leather goods in Italy than in the United States (Alchian and Allen, 1964, p. 74). Students are frequently asked to explain the phenomenon in economics examinations, and the question has found its way into an advanced text on economic theory (Stigler, 1966a, p. 103). The following quotation from University Economics provides what appears to be the "accepted" solution to the problem.
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