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Questions tagged [cross-price-elasticity]

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Averaging estimates of cross-price elasticity

We have data for 3 goods (equilibrium prices and quantities) and we want to know the cross-price elasticities among them. I think, this could be estimated as the following system of regressions: $$ \...
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Is cross-price elasticity a Cobb-Douglas production function?

This may seem like a silly question... Well... I guess, because it really is... But I have just realized that the intuition behind both principles may not be mutually exclusive. Consider we would like ...
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Significance of simultaneity BIAS in local retail shop belonging to a big retail chain

This question follows from the previous question on multiplicative BIAS in cross-price elasticity, but I think it deserves its own space. I have scanner data from a small store branch belonging to a ...
Athaeneus's user avatar
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Multiplicative (Self-reinforcing) BIAS in Cross-Price Elasticity

I have been trying to estimate cross-price elasticity of demand on market optimum data by simple regression such as: $$ln(x_i) = \beta_0 + \beta_i ln(P_i) + \sum_j^J \beta_j \cdot ln(P_j) + \epsilon$$ ...
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Why does the price of firewood from Ardennes forests rise when the price of natural gas from the North Sea rises?

I have an exam question from last year that I don't understand. I have to explain this : why does the price of firewood from Ardennes forests rise when the price of natural gas from the North Sea ...
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Is the price elasticity of a product equal to the sum of all cross-price elasticities of demand for that product? Why?

I encountered the claim stated in the title, without it being further substantiated. I'm looking for some elaboration on it, assuming it's true. Also on an intuitive level.
Nasan's user avatar
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Does the price change in the XED formula refer to price changes along the demand curve only?

I have been told by my peers that if lamb and beef were close substitutes, such that if the demand for lamb rises the price for lamb rises which causes the demand for beef to rise , this makes no ...
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Do Aggregated consumers make sense?

Aggregated consumers as a biased concept (in case of cross-price elasticity)? I try to approach aggregated consumption data as if it was a new consumer (similarly to approaching average data as if it ...
Athaeneus's user avatar
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2 votes
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Interpretation of more than one cross price elasticity of demand

I am writing an empirical paper and use cross sectional data to estimate elasticities using an "almost ideal demand system" by Deaton and Muellbauer (1980) using Stata. My question concerns ...
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How can I formulate price elasticity of demand equation when I want to add cross price elasticity?

I am trying to calculate the price elasticity of demand for a product where I used the equation log(volume) = elasticity * log(price) + seasonality dummies + trend index + CPI Here CPI is the consumer ...
Sameer's user avatar
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How to estimate if goods are complementary or substitutes when one good is always offered for free?

Usually whether two goods are complementary or substitutes can be measured by estimating cross-price elasticity of demand. If cross-price elasticity of demand is negative the two goods are ...
1muflon1's user avatar
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