Add a shipping cost, and the fancy apples win

Slap the same fixed cost, like freight, onto a cheap and an expensive version of a good, and the relative price gap between them shrinks. That makes the pricier, higher-quality version comparatively more attractive, which is why growers historically shipped their best apples out of state and kept the lower grades for local sale. Armen Alchian and William Allen described the effect in their 1964 textbook.

— Armen Alchian and William R. Allen, Alchian–Allen effect — University Economics, 1964
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