Let’s consider something else. Mobile phone prices fall (to boost sales) BUT people think this means poor quality so demand FALLS. Would this too be a Giffen good, a perverse behaviour?

Also look at micro demand. Prices fall, real income rises. If an inferior good then income elasticity then income elasticity tells us demand falls (if inferior) thus aren’t all -ve income elasticity of demand good, Giffen?

Look also at aggregate demand. Price level rises, AD slopes downwards (income effect) BUT fi wages rise faster then surely AD slopes upwards? or shifts but NOT sloping downwards…

Secondly, holidays are often taken on a fixed budget. Therefore if the price of camping holidays rose then if you still want the same time away there would have to be a cut back on hotel staying. Thus the extra days freed would then be spent camping.

Instead of camping then (as that is not such a close substitute for hotels) how about a luxury hotel and an average hotel. The same analysis as above:

Fixed budget
Discretionary income
10 day holiday

Average hotel price = £60 a day
Luxury hotel = £180 a day

Budget = £960

= 3 days in the luxury and 7 in the average.

The price of the average rises to £90.

The 7 days would now cost £630 leaving £330 for the luxury – not enough even for 2 days.

So you’d cut back even further on the luxury hotel to one day. (£180)

This still leaves you 9 days (£90 a day) = £990.

If your budget is not flexible enough even for that then you’d just have all ten days in the average hotel (assuming no other hotels around etc)

Hence: Giffen.

If that analysis is correct then the more general point that Giffen goods are scarce is also wrong.