In
economics, the
substitution effect is the term used to describe the shift of a
consumers purchasing choice away from a
commodity after its
relative price changes whilst maintaining the consumers total
utility. This effect is always
negative, signifying a move away from a commodity as its price is rising and the consumers try to maintain their standard of living.
When combined with income effect, substitution effect can be used to ascertain the total effect of a price change on the demand for a product.