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Inelastic Demand (inelastic + demand)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

What determines transaction costs in foreign exchange markets?

INTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 1 2008
Tarun Ramadorai
Abstract Using detailed data on the currency transactions of institutional fund managers, this paper shows that funds that experience high returns on their currency holdings also incur lower transaction costs on their currency trades. This finding holds both in the cross section, i.e. funds that perform better on average incur lower average transaction costs, as well as in time series, i.e. funds that do better over the past two months incur lower transaction costs on subsequent transactions. The results are consistent with foreign exchange dealers bidding for information from successful traders. They are also consistent with foreign exchange dealers exploiting price inelastic demand for foreign currency trades, or funds acting as secondary liquidity providers in foreign exchange markets. The paper also investigates the role of fund size, transaction frequency and return volatility on transactions costs. Copyright © 2007 John Wiley & Sons, Ltd. [source]

Discounts in Placing Pre-renounced Shares in Rights Issues

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2007
Seth Armitage
Abstract:, The paper presents evidence from UK rights issues on the discounts at which large blocks of new shares plus rights are sold. The shares are renounced by the shareholders entitled to them and placed with passive investors at substantial discounts of around 8% to the expected ex-rights midpoint price of the existing shares. Tests indicate that the discounts arise because of uncertainty about issuer value and inelastic demand for the shares rather than because the issuing companies are overvalued. The finding that selling renounced shares is costly removes an apparent advantage of rights issues compared with open offers and private placings. [source]

Seemingly Competitive Food Retail Regulations: Who Do They Really Help?

CANADIAN JOURNAL OF AGRICULTURAL ECONOMICS, Issue 3 2009
Bruno Larue
The food distribution and retail sectors in Quebec are highly concentrated and integrated as large food distributors are also involved in food retailing. As such, they are competing with small grocery and convenience stores they sell inputs to. A review of the industry suggests that there are important economies of size in distribution, but that smaller stores offering convenience face a more inelastic demand. Concerns over the survival of smaller stores in Quebec have motivated two types of regulations. The first type aims at reducing the cost advantage of dominant retailers by restricting the number of employees that they are allowed to use during specific time periods. The second type restricts retail prices. We develop a simple model capturing the main features of the industry to ascertain the impact of these regulations on retail and wholesale prices. Our results suggest that these regulations reduce welfare and may induce both tighter margins and lower surplus for small retailers. Au Québec, les secteurs du commerce de détail et de la distribution des aliments sont fortement concentrés et intégrés puisque les grands distributeurs d'aliments sont aussi engagés dans le commerce de détail. À ce titre, ils font concurrence aux petites épiceries et aux dépanneurs qu'ils approvisionnent. Un examen de l'industrie autorise à penser qu'il existe d'importantes économies de taille dans le secteur de la distribution, mais que les petites épiceries de dépannage sont confrontées à une demande plus inélastique. Les inquiétudes entourant la survie des petites épiceries au Québec ont motivé deux types de règlements. Le premier vise à diminuer l'avantage de coût des détaillants dominants en limitant le nombre d'employés pendant certaines périodes spécifiques. Le deuxième vise à limiter les prix de détail. Nous avons élaboré un modèle simple qui renferme les principales caractéristiques de l'industrie pour évaluer les répercussions de ces règlements sur les prix de détail et de gros. Nos résultats portent à croire que ces règlements diminuent le bien-être et peuvent entraîner un resserrement des marges et une diminution des surplus des petits détaillants. [source]

An error correction almost ideal demand system for meat in Greece

AGRICULTURAL ECONOMICS, Issue 1 2000
G. Karagiannis
Abstract This paper represents a dynamic specification of the Almost Ideal Demand System (AIDS) based on recent developments on cointegration techniques and error correction models. Based on Greek meat consumption data over the period 1958,1993, it was found that the proposed formulation performs well on both theoretical and statistical grounds, as the theoretical properties of homogeneity and symmetry are supported by the data and the LeChatelier principle holds. Regardless of the time horizon, beef and chicken may be considered as luxuries while mutton-lamb and pork as necessities. In the short-run, beef was found to have price elastic demand, pork an almost unitary elasticity, whereas mutton-lamb, chicken and sausages had inelastic demands; in the long-run, beef, and pork were found to have a demand elasticity greater than one, whereas mutton-lamb, chicken, and sausages still had inelastic demands. All meat items are found to be substitutes to each other except chicken and mutton-lamb, and pork and chicken. [source]