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R&D and Price Elasticity of Demand

R&D and Price Elasticity of Demand

Estimating the price elasticities of foreign trade flows by countries and product groups has a long tradition, see in particular the work of Houthakker and Magee (1969), the compilation by Stern, Francis and Schumacher (1976) and estimates by Wilson and Takacs (1979). Goldstein and Khan (1985) give an overview of the state of the art at the time of writing. More recent estimations of price elasticities of foreign trade (e.g. Senhadji and Montenegro, 1999, or Hooper, Johnson and Marquez, 2000) differ from those of the 1970s and 1980s mainly in that the methods of estimation now take account of unit roots in the variables of the export demand equation. The existing literature does not, however, systematically explore the relationship between price elasticity and characteristics of products. A growing number of studies exist on the relationship between R&D and the export performance of firms or countries, see e.g. Barrios, Gorg and Strobl (2003), Martinez-Zarzoso and Suarez-Burguet (2000), and Beise and Rammer (2003). These studies emphasize the important role of R&D for high exports, but they do not consider the issue of price elasticity – the topic of this paper. The formal approach used here is Chamberlinian monopolistic competition, which builds on the seminal work of Dixit and Stiglitz (1977). We model an economy that features a large number of sectors, each consisting of monopolistic competitive firms. Each sector is distinguished by its degree of R&D intensity, which constitutes a fixed production cost to firms. Consumers value variety within each sector. We use the term sector interchangeably with the terms “industry” or “product group”. The Dixit-Stiglitz specification we propose has been used widely in the literature. Since Krugman (1980) in particular, this approach has been one of the workhorses for explaining international intra-industry trade. We discuss the effects of trade between two countries within the above specification. Our empirical approach testing the theoretical finding that sectors with higher R&D intensity feature lower price elasticity is based on the exports of the seven major industrialised countries, subdivided into R&D-intensive and non-R&D-intensive products.
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Export Demand Elasticity Estimation for U.S. Cotton

Export Demand Elasticity Estimation for U.S. Cotton

The evolution of elasticities over time has been studied by employing a TVP model based on the Kal- man Filter. The TVP model was developed to relax the parameter constancy restriction of conventional models and takes the possibility of parameter changes into consideration when estimating a demand model. In contrast to alternative estimation procedures like the co-integration approach, the TVP approach offers a convenient way to estimate the export demand func- tion. In view of the shortcoming of analysis based on constant parameters, it has been suggested that analy- sis based on TVP would yield more reliable results regarding the price and income elasticities of cotton export demand. Furthermore, the TVP approach does not require stationary series before model estimation because state estimations are always conditional on their last realization, and therefore, TVP models are well suited to deal with nonstationary data. For this reason, the procedure of model specification and estimation is drastically simplified because it avoids the need for identification procedures represented by unit root tests, co-integration tests, and sample correlogram analysis. Durbin and Koopman (2012) showed that the Kalman filter is a useful device for recursively solving the state-space model and argued that the state-space model allows greater flexibility to address structural changes, which have been prevalent in the cotton market during the last 30 years.
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Consumption leisure complementarity versus income elasticity of demand under equilibrium price dispersion

Consumption leisure complementarity versus income elasticity of demand under equilibrium price dispersion

We see that the income elastic demand again takes place when the wage elasticity of labor supply is negative. Buying elastic goods, consumers come to the side of the pitfall of the “leisure model”. The cut of labor time is being rewarded by savings on purchase Q ∂ P/ ∂ S. At the higher wage rate level the consumer can afford to change the price niche and to buy products of higher quality. For example, the consumer chooses 18-year whiskey instead of 12-years aged. And there he discovers some new things. First, he recognizes the fact that he can get more marginal saving on purchase | ∂ P/ ∂ S| for the same quantity of drinks Q. Second, he discovers the better taste. And he undertakes two commonsense actions. First, he continues the search until he gets great price discount. He does it not only because Jones are living aside and he should confirm his reputation of the smart-shopper but because high price gives him a chance to make an economy with respect to his wage rate. Second, he changes the consumption-leisure pattern. Usually changes in the quality are followed by changes in consumption patterns. While one 12- years drink has taken a quarter of an hour, the 18-years drink with better taste takes a half an hour. It means that the consumer increases both search and leisure time. The same thing happens with meals. Let’s take a consumer who has usually prepared the cheap pork with potatoes but after the increase in wage rate he decides to cook the expensive veal with eggplants under the delicious red wine-based sauce. Evidently both the time of search of inputs and the time of cooking are increasing. It’s not worth debating here that a time for dinner party is also increasing.
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An econometric study of wholesale meat prices in the United Kingdom

An econometric study of wholesale meat prices in the United Kingdom

ESTIMATES OF QUARTERLY WHOLESALE MEAT DEMAND ELASTICITIES (DISAGGREGATED). Elasticity of Elasticity With Resp e ct To:[r]

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Estimate of Armington substitution elasticity for fishery products in Iran

Estimate of Armington substitution elasticity for fishery products in Iran

The subject of the World Trade Organization (WTO) has created opportunities for members to take advantage of by accessing global markets. More than 50 % of world fish trade is done in third world countries while industrialized nations mainly import fish so that Europe, America and Japan are importing half of the world’s aquatics. Certainly, in terms of exports and imports of fishery products in the country, implementation of appropriate policies requires the use of domestic prices and a variety of trading instruments that are appropriate to the business situation. Studies that have been carried out in this area include: Nunez (2004) Consider the Maximum Entropy approach is a suitable tool to estimate such elasticities for fishery and other activities in Mexico. Also, Estimate the Armington elasticities using the 72 Activities disaggregation level of the System of National Accounts of Mexico (SNAM) is to be mentioned in this regard. Specifically, we use three main model specifications to estimate short run and long run elasticities. The first model is just the simplest regression in levels, while the second one is a partial adjustment
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A Structural Econometric Model of Price Discrimination in the Mortgage Lending Industry

A Structural Econometric Model of Price Discrimination in the Mortgage Lending Industry

Recent structural econometric approaches to nonlinear pricing or price discrimina- tion include the pionneering work of Ivaldi and Martimort (1994), using data on energy provision to French dairy producers, and Bousquet and Ivaldi (1997), on telephone pric- ing. Third-degree price discrimination on the European car market has been studied by Goldberg and Verboven (2001). Clerydes (2001) uses data on book sales to study discrim- inatory pricing of paperbacks and hardcovers. Leslie (2001) studies price discrimination in the sales of tickets for a Broadway show. Cohen (2000) shows that in the U.S paper towel market, package sizes are used to price discriminate. McManus (2001) tests for the presence of second-degree discrimination, and therefore product design distortions, in the price-quality menus o®ered by co®ee shops surrounding the University of Virginia. Mi- ravete (2001) studies nonlinear tari®s and consumer choice in a menu of optional calling plans proposed by the Bell telephone company in Kentucky. Finally, Verboven (2002) uses di®ering driver preferences for gasoline and Diesel cars in Europe to estimate the extent of price discrimination by manufacturers. Many of the above quoted studies use a form of discrete choice model of product di®erentiation to represent the behaviour of heterogeneous consumers 2 .
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The Impact Of Price Changes On Demand Among Poor Households In A South African Township

The Impact Of Price Changes On Demand Among Poor Households In A South African Township

The government policy aimed at fighting malnutrition and boasting demand for basic commodities among the poor during inflation should consider the poor households’ demand patterns together with their poverty levels. Considering poverty and demand in isolation might misdirect the policy to a wrong population group where the poorest households might fail to benefit. If the aim is to improve nutrition there is need for government policy to target at the poorest households instead of the all poor in general. This can assist in mitigating the impact of price rises on the poorest by focusing on malnutrition control and broader social protection networks. Finding out a certain percentage of the population which is poor is not good enough, there is need to investigate how deep the poor are in poverty. This is because policy implications for these two household types are bound to differ. For the very poor households, food subsidy is very essential while for the moderately poor, the government can extend the subsidy to other non-food items. Governments should also access their performance in responding to the food crisis.
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The price elasticity of demand for prescription drugs: An exploration of demand in different settings

The price elasticity of demand for prescription drugs: An exploration of demand in different settings

In contrast to the United States, Canada went down the route o f universal health insurance coverage for core medical services beginning in 1966 with the Medical Care Act (Grootendorst, 2002). Prescription drug coverage was left to the territories and provinces, and all have enacted public drug coverage for the low-income and elderly groups. Although the Commission on the Future o f Health Care in Canada (Romanow, 2002) recommended in a widely cited report that prescription drug coverage be integrated into core health services in Canada to ensure appropriate utilization, the Canadian government has not taken action on this recommendation. These two different paths have also influenced the uptake o f cost sharing provisions within each country. In the United States competition between insurers is assumed to be more efficient than a single purchaser system, and even within government- financed health care, policymakers have introduced competition between insurers. Around 15 percent o f the US population is uninsured, but many o f the current administration’s proposals for extending coverage involve tax credits or deductions (Cogan et al., 2005) or health savings accounts (Cannon and Tanner, 2005), both of which are more market-oriented ideas. There seems to be a theme throughout time among a significant (or at least powerful) group that neo-classical/market-oriented economics can determine the health care system that is best for society. This belief is reflected in the attitude among some policymakers towards the uninsured7 and the argument that moral hazard is prevalent and should be dampened (Jost, 2007) as reflected in recent provisions allowing Medicaid to charge higher co-payments and the significant cost sharing requirements enacted in Medicare Part D. Thus, the prevalence o f cost sharing provisions within both public and private coverage is not only based on a desire to limit drug expenditures, but also on an assumption that the
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Rainfall variability and groundwater availability for irrigation in Sub Saharan Africa: evidence from the Niayes region of Senegal

Rainfall variability and groundwater availability for irrigation in Sub Saharan Africa: evidence from the Niayes region of Senegal

Hydroeconomic model data Table B4: Parameter values for the hydro-economic models Parameter Infiltration rate Elasticity of the demand function Constant of the demand function Discount r[r]

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A conceptual and empirical framework to analyze the economics of consumer food waste

A conceptual and empirical framework to analyze the economics of consumer food waste

evidence on how to reduce food loss and waste successfully across the food supply chain. Food waste can be disposed of using the EPA’s Food Recovery Hierarchy (EPA, 2014): reduce food waste; divert for food use; recover, recycle or compost; and lastly, place in landills or in- cinerate. However, the priority ordering among dispositions of food loss and waste is yet to be determined (Galanakis, 2015; Eriksson et al., 2015; Bellemare et al., 2017). Furthermore, the economics of policies afecting the eicacy of such policies has not been derived because no foundational integrated economic model of the vertical and loss and waste disposition markets has been developed at the market level. Policy priorities will depend on multiple and interrelated drivers, the impacts of which can only be determined if such an economic frame- work has been developed that takes into account all the major inter- actions.
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Monetary Operating Procedures: Principles and the Indian process

Monetary Operating Procedures: Principles and the Indian process

As markets deepen and interest elasticities increase it is optimal for emerging markets to shift towards an interest rate instrument since continuing monetization of the economy implies money demand shocks are large. In an extension of the classic instrument choice problem to the case of frequent supply shocks, it is shown the variance of output is lower with the interest rate rather than a monetary aggregate as instrument, if the interest elasticity of aggregate demand is negative, and the interest elasticity of money demand is high or low. It is necessary to design an appropriate monetary policy response to supply shocks . An evaluation of India’s monetary policy procedures and of the recent fine - tuning of the liquidity adjustment facility finds them to be in tune with these first principles and in the direction of international best practices. But a survey of country experiences and procedures, and some aspects of the Indian context suggest further improvements.
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Study on Food Import in D  R  Congo

Study on Food Import in D R Congo

More of the poor population lives in the rural regions and are highly dependent on agriculture for their livelihood in D. R. Congo and in other developing coun- try in the world [1]. The Agriculture in the world is the principal of economic development these nations [2]. In Africa, the major agricultural growth oppor- tunities will be in regional and domestic markets for food staples. To seize these opportunities, there should be continued and sound macroeconomic policies to further improvements in the investment in infrastructure and institutions [3] [4]. At least four out of every ten children suffer from stunted growth due to poor nutrition. Since no enough is grown locally to meet demand, supplies have to be brought in from outside. With rising global prices, it is hard for families to afford imported food.
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Structural changes in the beef meat demand in Slovakia and demand elasticity estimation

Structural changes in the beef meat demand in Slovakia and demand elasticity estimation

Abstrakt: Článok sa zameriava na zhodnotenie návykov, postojov a správania sa spotrebiteľov hovädzieho mäsa. hlavným cieľom článku je stanovenie determinantov dopytu po hovädzom mäse individuálnych domácností s použitím hlavných ekonomických faktorov. Sledovanie a analýza spotrebiteľského správania na úrovni individuálnych domácností a následná komparácia vplyvu faktorov na rozhodovanie sa spotrebiteľa s agregovanou úrovňou nám dáva predpoklady k dôkladnému pochopeniu determinantov spotrebiteľského správania. Pre odhad dopytu po hovädzom mäse v Slovenskej republike boli použité panelové údaje. Dáta sme čerpali zo štatistiky rodinných účtov vedenej Štatistickým úradom Sr. Výsledkom výsku- mu sú koeficienty cenovej a príjmovej elasticity dopytu po hovädzom mäse. Výsledky indikujú, že vývoj spotrebiteľských zvyklostí na Slovensku počas posledných dvoch desaťročí prešiel zásadnými štrukturálnymi zmenami. Pokles spotreby hovädzieho mäsa je ovplyvnený najmä klesajúcou kúpnou silou a výskytom ochorenia BSE. na základe odhadu koeficientov elasticít môžeme konštatovať, že dopyt po hovädzom mäse je cenovo a príjmovo neelastický.
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Determining Whether the Chinese Services Industry Is Stagnant: An Empirical Test of Baumol’s Model

Determining Whether the Chinese Services Industry Is Stagnant: An Empirical Test of Baumol’s Model

computers everywhere except in the productivity statistics. This paradox reflects the status quo of the productivity growth in manufacturing sector to some extent [15]. Triplett and Bosworth (2003) expand Baumol’s theory and his study finds that many growth rates of services productivity are very low, even negative [10]. Sasaki (2007) indicates that if services are used as both final demand and intermediate inputs, the employment shift will decrease the per capita real GDP growth in long run [16]. But there are also some theoretical criticisms on Baumol’s hypothesis from some economist, especially from statisticians. As a representative critic, Griliehes (1992) argues that there are some statistical errors in the output calculation of the service industry and productivity because of the service’s "inscrutability” [17]. And as a result, the current statistical methods have greatly underestimated the output and the productivity growth in services sector. Incorporating human capital into Baumol’s model, Pugno (2006) considers that the consumption of services increases the labour productivity both in services and manufacturing, and the employment shift to services increases does not decreases the per capita real GDP growth [18]. De Vincenti (2007) reaches a similar conclusion that the rising rate of productivity as a result of the consumption of services increases the real GDP growth [19]. At the end of the day, it is still difficult to determine the net result for Baumol’s hypothesis [20].
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Agricultural subsidy with capacity constraints and demand elasticity

Agricultural subsidy with capacity constraints and demand elasticity

Again, we will analyse the base model under the area subsidy and price subsidy conditions. Then com- pare the results of the tight constraint case with the non-tight constraint status. The non-tight constraint means λ i > 0. The same as Nie and Chen (2012), we further assume that λ A  = λ B , which means the shadow prices of the cultivating lands of different crops are the same. Without losing the general, we denote A to the food crop and B to the cash crop. Furthermore, we assume that the food crop is more important than the cash crop, which means the farmers will plant enough food crops at first if they face the farmland constraint and that the assumption is acceptable. Area subsidy
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A meta-analysis on the price elasticity of energy demand

A meta-analysis on the price elasticity of energy demand

A major aim of this paper is to explain the fit of the demand for energy regarding the evolution of prices, conditioned to other determinants of the behavior of agents. In fact, merely taking look at Figure 2 or at any of the components of Figure 3, several relevant matters for the literature in this area become evident. First, energy consumers adapted to price shocks as soon as the first oil crisis took place at the beginning of the 1970s. Second, the second oil crisis a few years later affected energy demand mainly through oil products and natural gas. However, the evolution of electricity consumption closely followed the evolution of GDP and it benefited from decreases in real electricity prices for a long time. Third, even though Figure 3 does not distinguish between different types of energy consumers (available upon request), the evolution of income is the main determinant of their energy demand, particularly in industrial and commercial sectors, and therefore leaves limited possibilities for corrective pricing signals. Fourth, only the 2008 economic crisis has affected aggregate demand (and its components) and this was due to decreases in economic activity rather than to energy price movements. Finally, cross-price effects appear to have the potential to substitute polluting sources in the energy domain. Contrarily, if clean energy sources face price increases, substitution and the limited capacity of demand reduction through prices will both move in a negative environmental direction. It seems therefore that other alternatives, such as information and awareness, should play a role within corrective public policies in this area.
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Impact of Earnings per Share on Market Price of Share with Special Reference to Selected Companies Listed on NSE

Impact of Earnings per Share on Market Price of Share with Special Reference to Selected Companies Listed on NSE

Production, quality and maintenance are the significant parts of any manufacturing firm. In the competitive business environment, managers of manufacturing industries encounter the challenge everyday to produce quality products and to provide better services than before to customers. Due to technological innovations and scientific developments around the world, manufacturing infrastructure is also changing rapidly. Three important factors of the Economic Manufacturing Quantity (EMQ) model have been dealt with prior significance. First it is assumed that the production facility is not perfect reliable. Second, the production rate is not predetermined and fixed in advance. Third, the modern facilities are not free from deterioration due to epoch. As a result, random machine shifts from „in-control‟ state to „out-of-control‟ state frequently occur during production runs and some percentage of non-conforming items is produced. Further, the process deterioration after a machine shift may result in a machine breakdown in which case the interrupted lot is usually aborted and then the basic EMQ model loses its usefulness. Therefore, from theoretical as well as practical view points, the study of EMQ problem for unreliable manufacturing systems is quite significant and meaningful.
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Chapter 1: Supply, Demand and Elasticity

Chapter 1: Supply, Demand and Elasticity

A decrease in the price of a good normally results in an increase in the quantity demanded by consumers because of the law of demand, and conversely, quantity demanded decreases when price rises. As summarized in the table above, the PED for a good or service is referred to by different descriptive terms depending on whether the elasticity coefficient is greater than, equal to, or less than −1. That is, the demand for a good is called:

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Health economics for health professionals: An Aotearoa/New Zealand perspective

Health economics for health professionals: An Aotearoa/New Zealand perspective

Moral hazard occurs when the behaviour of a person changes if they are not required to meet the full cost of their actions. Individual consumers, when they buy health insurance, or are covered by a government health service or scheme frequently do not meet the full costs of the health care they access. There is a danger that these individuals may take less care of themselves, access a different type of treatment, or consume more health care than they would if they paid the full cost out of their own pockets. If patients had to pay the full cost of hospital treatment, they may choose to have day surgery rather than treatment as an inpatient. Similarly, health care professionals may suggest different treatment options in the absence of health insurance or government funding of health. Thus, moral hazard may increase demand for health services creating budgeting and rationing problems for funding agencies, insurers and providers. State funded health insurance, nonmarket rationing of health services,
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Price Elasticity Estimates of Cigarette Demand in Vietnam

Price Elasticity Estimates of Cigarette Demand in Vietnam

This suggest that tobacco taxation in Vietnam is likely to have a significant impact on cigarette consumption. Middle aged wealthy men are the ones who would mostly bear the burden of such tax as this is the population among which cigarette consumption is more prevalent. Moreover, since the estimated price elasticity is less than one in absolute value, the introduction of cigarette taxation would also generate additional revenue for the govern- ment budget. These conclusions must however be tempered for two reasons. The first one is that Vietnam share boundaries with Cambodia, Laos and China and that increasing smuggling activity is also likely to be an outcome of increased taxation of tobacco products in Vietnam. The second point is that unfortunately, because data on quantities consumed were lacking in the survey, substitution patterns between water pipe tobacco and cigarette consumption could not be analyzed.
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