The celebrated model of Gallego and van Ryzin is specialized to the case of constant elasticity of demand. A closed form is developed, which has an even simpler form than that arising with exponential demand and which possesses an excellent approximation. In this environment, monopoly is efficient, which means that all the behavior usually attributed to monopoly pricing is actually a consequence of efficient pricing and would arise even in a perfectly competitive environment. If the initial supply is not too large, consumers have no incentive to delay their purchases to get a lower price at the average inventory prevailing at any time.
This study measures the impact of economic determinants on the international demand for tourist services in Portugal. A panel data set of 15 European countries over the period 1995-2003 is used. This article used appropriate panel data techniques of real per capita income, the price index of tourism service, geographical distance on demand for Portugal tourism services. In contrast to previous studies, this manuscript used a dynamic panel data to solve the problems of serial correlation and endogeneity. The estimate of the relative price elasticity of demand for Portugal's is 0.35 in the short run and 0.37 in the long run. The corresponding estimates for income elasticity on demand are 0.402 and 0.391 respectively.
...SUPPLY AND DEMAND ELASTICITY. The demand for goods depends on the price for tho...
Does the experience vary across countries and, if so, why? A vast literature deals with these issues, including a number of comprehensive surveys from which this paper draws, and where the interested reader is advised to go for more details.1 For the purposes of this article, I will review the evidence so far on the four main ways in which trade is linked with inequality and poverty (economic growth, family income, the labor market, and fiscal effects) and attempt to draw some lessons for policy. A study for India found that trade liberalization has indeed increased labor demand elasticity and has done so more in states with more labor market flexibility. 12 A study in Mexico found that tariff declines were associated with increased income uncertainty.13 A more uncertain product demand...
... trap by estimating the interest elasticity of demand for money as short-term rates approached...
Investments in dedicated and flexible capacity have traditionally been based on demand forecasts obtained under the assumption of a predetermined product price. However, the impact on revenue of poor capacity and flexibility decisions can be mitigated by appropriately changing prices. While investment decisions need to be made years before demand is realized, pricing decisions can easily be postponed until product launch, when more accurate demand information is available. We study the effect of this price decision delay on the optimal investments on dedicated and flexible capacity. Computational experiments show that considering price postponement at the planning stage leads to a large reduction in capacity investments, especially in the more expensive flexible capacity, and a signific...
..., the magnitude of forecast error, the elasticity and profit margins of the products considered, the...
This study examines the capitalization of property taxes in real property. Capitalization theory would suggest that property values depend on the level of public services and taxes within a community. Differences in taxes relative to public services should be reflected in property values. Studies on property tax capitalization have essentially tested the Tiebout hypothesis that allocative efficiency in the delivery of public services is achieved through a system of local governments. Some conclusions from the literature are: (a) the degree of capitalization depends on the elasticity of supply of housing. An increase in demand with inelastic supply will raise the price of housing whereas, with a perfectly elastic supply, a change in demand will not change price, (b) tax capitalization ca...
The effect on output by third degree price discrimination was analyzed through the use of calculus. The Lerner index, the adjusted concavity and the demand elasticity were the elements identified in determining the effect. A general criterion based on Robinson's concavity concept was developed to identify the output effect of discrimination. Analysis shows that the concavity and convexity of demand curves could have different implications on the output effect of price discrimination.
ATHENS, Ga., March 9, 2011 /PRNewswire/ -- Increasing demand for wood raw materials indicates higher pine stumpage prices for forest owners and investors. Forisk Consulting forecasts sawtimber prices for the US South strengthening 4.6% into 2012 and 5.5% into 2013 as lumber production increases with housing starts. Alternately, pine pulpwood - the lower valued raw material used for pulp, OSB and bioenergy - gains 1.4% and 2.7% into 2012 and 2013 South-wide, with high variance across the 11 states covered in Forisk's models. The ForiskFORECAST emphasizes the limits of regional or national forecasts for timber markets, and the critical importance of assessing timber prices locally. In 2011, states such as Georgia, Louisiana and Mississippi show sawtimber prices exceeding $30/ton, and Flor...
Why is the cost of health care so high? This question has a very simple answer. The cost of health care is high and continues to rise because there is no elasticity of demand for health care services.
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