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Article
Publication date: 1 December 1998

Andrés Vázquez

This paper presents a simple alternative measure for the arc elasticity of demand that comes naturally and possesses some attractive properties. In particular, it equals the point…

2546

Abstract

This paper presents a simple alternative measure for the arc elasticity of demand that comes naturally and possesses some attractive properties. In particular, it equals the point demand elasticity at some point inside the interval, thus leading to the exact estimations of demand elasticity when this is constant. It also yields narrower values that Dalton’s, Lerner’s and Allen’s widely used measures, and its relationships with the arc revenue elasticities keep exact analogy with those established for the point elasticity case.

Details

Journal of Economic Studies, vol. 25 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Book part
Publication date: 23 November 2015

James Langenfeld, Jonathan T. Tomlin, David A. Weiskopf and Georgi Giozov

To develop a framework for systematically defining the relevant market for intermediate goods that incorporates downstream market conditions.

Abstract

Purpose

To develop a framework for systematically defining the relevant market for intermediate goods that incorporates downstream market conditions.

Methodology/approach

We combine the well-established “Hicks-Marshall” conditions of derived demand for inputs with “critical loss/critical elasticity of demand” to yield insights into the definition of antitrust markets for intermediate goods and the competitive effects from a merger.

Findings

We show that examining “Hicks-Marshall” conditions can provide a more rigorous framework for analyzing relevant markets for intermediate goods. We also show that solely examining demand substitution possibilities for direct customers of an input can lead to an incorrect market definition.

Research limitations/implications

Our framework may be difficult to apply in circumstances when several different downstream products use the input being examined and each of those downstream products has a different elasticity of demand.

Practical implications

We illustrate how reasonable ranges for key parameters relating to the ability of firms to substitute to other inputs and to adjust to downstream market conditions will often be sufficient to define antitrust markets for intermediate goods in practice.

Originality/value

Previous antitrust analysis has not systematically analyzed the impact of downstream market conditions in assessing market definition for intermediate goods. The framework we develop will be useful to future researchers attempting to define relevant markets for intermediate goods and evaluating the competitive effects of a merger.

Details

Economic and Legal Issues in Competition, Intellectual Property, Bankruptcy, and the Cost of Raising Children
Type: Book
ISBN: 978-1-78560-562-8

Keywords

Abstract

Details

Handbook of Transport Modelling
Type: Book
ISBN: 978-0-08-045376-7

Article
Publication date: 2 December 2022

Christian H. Kuhlgatz, Jiaqi Huang and Gerrit Antonides

The purpose of this paper is to evaluate the effects of price and income changes on food and nutrient demand of rural households by including own-produced food and production-side…

Abstract

Purpose

The purpose of this paper is to evaluate the effects of price and income changes on food and nutrient demand of rural households by including own-produced food and production-side effects in the demand estimation to correct potential measurement bias in the income and price elasticities for rural households in underdeveloped areas. Simulation results of income and grain price changes on food and nutrition security are provided for economic nutrition security policy applications.

Design/methodology/approach

This study analyzes survey data of 1,555 households from underdeveloped rural areas of China to find out how price and income changes affect food and nutrition insecurity of rural households. The authors employ the quadratic almost ideal demand system (QUAIDS) in a two-stage budgeting framework, using quality adjusted prices that were retrieved with regressions of the difference between the unit value surveyed at household level and its village average on household characteristics. The bias correction is implemented by using an augmented IV (instrumental variable) method, in which each market price is instrumented with farm-specific variables. Important macro- and micronutrient elasticities are computed for (a) households with agriculture as main income and (b) other households (of which still many have agriculture as a side business). Finally, the authors use these elasticities to simulate how changes in income or grain prices affect the food and nutrition security in the studied areas.

Findings

In general, food income elasticities of agricultural households are at a higher level than those for other households, and so are the food price elasticities. Income changes also have a greater nutritional effect on agricultural households than on other households. Nutrient income elasticities ranged from 0.22 (energy) to 0.27 (Vitamin A) for agricultural households and from 0.19 (energy) to 0.23 (Vitamin A) for other households. Grain price increases have greater effect on nutritional status of non-agricultural households, while a grain price reduction is not clearly favoring the nutritional situation of a particular household group.

Originality/value

This demand study contributes to the literature by taking into account differences in consumption of own production between households and the potential endogeneity of prices resulting thereof. The authors also demonstrate that merely reporting nutrient elasticities might not be sufficient for policy recommendations, and simulations should be reported as a valuable addition.

Details

China Agricultural Economic Review, vol. 15 no. 1
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 1 March 2011

Juyoung Lee and Elena E. Karpova

The purpose of this paper is to investigate aggregated apparel demand in the USA and Japan and to assess the positions of apparel products manufactured in the USA and Japan in…

3440

Abstract

Purpose

The purpose of this paper is to investigate aggregated apparel demand in the USA and Japan and to assess the positions of apparel products manufactured in the USA and Japan in comparison to imported apparel.

Design/methodology/approach

Based on Porter's industry competitiveness theory as a theoretical framework, the two‐step demand analysis, time‐series market analysis and elasticities of demand using “Almost ideal demand system” was conducted in order to reveal the overall market conditions of the USA and Japan and the market positions of domestically manufactured and imported apparel products in both countries.

Findings

Regardless of the country of origin, US consumers were price conscious in purchasing apparel products because they decreased purchase for not only domestically produced products but also imported products when prices increased. However, Japanese consumers' price concept toward apparel products was dual. They increased their purchase of domestically made products if the price was higher, and decreased their purchase of imported products.

Originality/value

This paper provides a framework for the apparel industry competitiveness assessment with regard to the demand‐side analysis of Porter's competitiveness theory. Moreover, there is no research in the current literature that assessed the US apparel demand with regard to industry competitiveness and a cross national view, especially compared with the Japanese apparel industry.

Details

Journal of Fashion Marketing and Management: An International Journal, vol. 15 no. 1
Type: Research Article
ISSN: 1361-2026

Keywords

Article
Publication date: 8 June 2015

Sakiru Oladele Akinbode

Most demand studies have concentrated on the estimation of expenditure elasticities for single commodity at a time thereby not being able to reveal the details of the…

Abstract

Purpose

Most demand studies have concentrated on the estimation of expenditure elasticities for single commodity at a time thereby not being able to reveal the details of the relationships among various food items demanded by households. The purpose of this paper is to simultaneously estimate the demand equations for a number of food items and to estimate cross-price elasticities which are necessary for studying consumer behaviours, marketing, production planning and policy making.

Design/methodology/approach

Relevant data were collected from 320 randomly selected households in a multistage sampling procedure. The normalized data were analysed in a system of equation with symmetry, adding-up and homogeneity restrictions imposed on the model.

Findings

Expenditure elasticities show that gaari and palm oil were inferior food items while others could be classified as normal. Own-price elasticities showed that beans, plantain, yam flour and rice were luxuries while others were necessities. Cross-price elasticities revealed that some were substitutes of one another while others were compliments and some were not related.

Research limitations/implications

The data were collected using a month recall approach and generalizing its findings beyond such months of a year may be misleading. Therefore, other researchers should repeat the study across months and locations.

Social implications

The study recommended that food policies should be broad based to encompass majority of the food items consumed in the study area given the intrinsic relationship inherent among them as their demands were interrelated and consumer behaviours as revealed by various elasticities be considered in formulating food-related policies.

Originality/value

The paper emphasized the need to model food demand in a system of equations as against single equation modelling.

Details

International Journal of Social Economics, vol. 42 no. 6
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 13 November 2007

Danny I. Cho, Mikhail Permyakov and Tomson Ogwang

The purpose of this paper is to investigate structural changes in the elasticity of demand for wine in the Province of Ontario and in Canada as a whole. It will provide academic…

1281

Abstract

Purpose

The purpose of this paper is to investigate structural changes in the elasticity of demand for wine in the Province of Ontario and in Canada as a whole. It will provide academic researchers and practitioners with a better understanding about structural changes in the levels of wine demand elasticities over time. It will also help the relevant governments and wine business establishments in developing taxation policy and business decisions.

Design/methodology/approach

The Kalman filter method, in conjunction with the Chow test, is applied to investigate structural changes in the elasticity of demand for wine. The Chow test is used for primary investigations of structural changes in the elasticity of demand for wine over time, whereas the Kalman filter method provides information about the behavior of the elasticity coefficients over time.

Findings

The Chow test reveals that structural changes in wine demand for Ontario are more pronounced than those for Canada as a whole. The Kalman filter results indicate that increased (decreased) government taxation could be an effective tool for discouraging (encouraging) consumption of wine. The analysis of own‐price elasticity suggests that the effects of increased government taxation on wine consumption be totally unexpected. Cross‐price elasticity coefficients change their signs over time, suggesting that some of the goods that are considered to be complements may become substitutes. Income and unemployment levels have different effects on wine consumption in Ontario and in Canada as a whole.

Research limitations/implications

There may be variation in results by wine color (red or white), country of origin (imported or domestic), or price (premium or non‐premium).

Practical implications

Understanding changes in the elasticity of demand structure for wine over time would help policy makers at the provincial and federal levels come up with effective tools for controlling consumption of wine over time, including their taxation policies. For the wine business establishments, the information on consumer response is important for pricing purposes.

Originality/value

The Kalman filter has not previously been used to examine structural changes in the demand for wine in Canada.

Details

International Journal of Wine Business Research, vol. 19 no. 4
Type: Research Article
ISSN: 1751-1062

Keywords

Abstract

Details

Explaining Unemployment: Econometric Models for the Netherlands
Type: Book
ISBN: 978-1-84950-847-6

Article
Publication date: 1 April 2006

James Fogarty

The demand for alcohol is a well‐researched topic, yet the published literature regarding consumer responses to changes in the price of alcohol includes many conflicting and…

7395

Abstract

Purpose

The demand for alcohol is a well‐researched topic, yet the published literature regarding consumer responses to changes in the price of alcohol includes many conflicting and inconsistent results. This paper seeks to present an analysis of known own‐price elasticity estimates, and to attempt to understand why reported results differ.

Design/methodology/approach

The approach taken to analysing the data is the meta‐regression approach. Specifically, the meta‐regression considers 150 beers, spirits, and wines, own price elasticity point estimates, which have been drawn from studies that consider demand responses to changes in the price of alcohol in 18 different countries.

Findings

The results of the empirical work reported in this paper suggest that the year of the study, the length of study, the per capita level of alcohol consumption, and the relative ethanol share of a beverage are important factors when explaining variations in consumer demand responses to changes in the price of alcohol. Interestingly, the study also suggests that country‐specific and beverage‐specific effects are not important.

Originality/value

The paper is valuable as it uses the meta‐regression framework to control for study design characteristics and, once these characteristics are controlled for, it becomes possible to identify the underlying trend in the demand for alcohol. Specifically, the trend was shown to be one where the demand for alcoholic beverages became increasingly inelastic up to 1969 and decreasingly inelastic thereafter.

Details

British Food Journal, vol. 108 no. 4
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 17 August 2012

Dang Luo and Bo Song

The purpose of this paper is to research the status quo and future trend of the income elasticity of consumer demand of Chinese rural residents.

339

Abstract

Purpose

The purpose of this paper is to research the status quo and future trend of the income elasticity of consumer demand of Chinese rural residents.

Design/methodology/approach

The paper uses Model ELES and Model GM(1,1) to analyze and predict the income elasticity of consumer demand in the rural areas of China.

Findings

The findings show the indicator that the income elasticity of consumer demand in the rural areas of China is quite large at present, but most sub‐categories of the indicators show a declining trend in the future.

Practical implications

The paper includes implications for the relevant departments to adjust the economic polices timely and reasonably, according to specific form based on the findings above.

Originality/value

The income elasticity of consumer demand is an important indicator reflecting the relationship between consumer demand and income, so it is of great significance to research it.

Details

Grey Systems: Theory and Application, vol. 2 no. 2
Type: Research Article
ISSN: 2043-9377

Keywords

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