What is the Alcheon Allen theorem?

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.