In today’s FT:
Economist Tyler Cowen, a professor at George Mason University, has
pointed out that the Alchian-Allen theorem applies to any long-distance
The theorem, briefly, implies that
Australians drink higher-quality Californian wine than Californians,
and vice-versa, because it is only worth the transportation costs for
the most expensive wine. Similarly, there is no point in travelling to
see your boyfriend for a take-away Indian meal and an evening in front
of the telly. To justify the trip’s fixed costs, you will require
champagne, sparkling conversation and energetic sex. Insist on it.
optimal-experimentation theory suggests that at this tender stage of
life you are highly likely to meet someone even better. Socialise a lot
while your boyfriend is not around.
Here is Trudie on that same topic. By the way, here are two clips from Tim’s BBC Econ TV show, on YouTube.