What is the Alcheon Allen theorem?

What is the Alcheon Allen theorem?

## Sources:

The Alcheon Allen theorem, as discussed by Dwarkesh Patel, is an economic concept that suggests if you increase the cost of a category of goods in a fixed way, people will shift their consumption toward higher-grade varieties. For instance, if there's a fixed dollar increase in the cost of transporting oranges, the relative cost difference between higher-end and lower-end oranges decreases, leading consumers to choose higher-quality options. Dwarkesh applies this idea to the construction industry, arguing that high transportation costs for prefabricated homes prompt consumers to prefer more unique and customized designs due to the fixed cost impact 1.

## The Cost of Customization

Dwarkesh and Brian discuss the relationship between transportation costs and the preference for unique designs in homes. They explore the concept of the Alcheon Allen theorem and how it applies to the construction industry. The conversation highlights the impact of fixed costs on consumer choices and the potential for mass-produced offerings in the housing market.

## The Lunar Society

Brian Potter - Future of Construction, Ugly Modernism, & Environmental Review

1

RELATED QUESTIONS