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How can I distinguish between those factors that affect supply elasticity and those that shift it? I am trying to make two regressions, one with the determinants that affect its elasticity and the other with the determinants that shift the curve. However, it seems that many of the factors are common, for example, the number of producers or technology. Any ideas?

Thanks in advance!

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  • $\begingroup$ How is number of producers related to price elasticity of supply? Also state of technology (production function) influences the elasticity of supply curve. Change in technology shifts it. $\endgroup$
    – Dayne
    Nov 24 '20 at 5:27
  • $\begingroup$ Thank you @Dayne. I was thinking that as the number of sellers in the market increases, the production capacity increases. But perhaps I am confused because I am referring to the production capacity of the market and not to the capacity of each individual producer. In other words, elasticity refers more to changes in production processes on an individual basis while shifts refer to factors that increase overall production? And how can I measure the state of technology? $\endgroup$
    – angelavtc
    Nov 24 '20 at 9:59
  • $\begingroup$ elasticity refers to how sellers react to change in prices. An increase by $x$% in prices leads to $y$% increase in production. $y/x$ is elasticity. In this it is assumed that technology (production function) doesn't change. An example of shift would be switching to a new technology of production (such as using an advanced machine). $\endgroup$
    – Dayne
    Nov 24 '20 at 10:07
  • $\begingroup$ So, for example, if the supply curve of a market becomes more elastic from one hour to the next, what can we say? that the producers, given current technology, decided to produce more? while if the curve shifts from one hour to the next we will say that it was because they acquired new technology (or any other factor that shifts the curve)? My problem is that I analyse a market hour by hour and I notice that sometimes the elasticity changes and sometimes it shifts, its difficult to make conclusions on an hourly basis. $\endgroup$
    – angelavtc
    Nov 24 '20 at 10:19
  • $\begingroup$ First some basic understanding: change in supply every hour does not necessarily mean change in elasticity. Given a supply (as a function of price) means that elasticity (as a function of price) is fixed. If every hour price is changing then yes elasticity (which is a function of price) will also change. Your claim that supply curve is shifting by the hour seems less realistic. Perhaps, you are dealing with aggregate supply curve and you think it is shifting because of change in number of suppliers every hour. In that case, the aggregate supply function needs to be carefully constructed. $\endgroup$
    – Dayne
    Nov 24 '20 at 10:58

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