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Price Elasticity (price + elasticity)
Selected AbstractsIncome Distribution, Price Elasticity and the ,Robinson Effect'THE MANCHESTER SCHOOL, Issue 5 2004Corrado Benassi In The Economics of Imperfect Competition, Joan Robinson argued that an increase of the consumers' incomes should make demand less elastic,which, although reasonable about individual demand as an assumption on preferences, suggests a role for income distribution as far as market demand is concerned. We use Esteban's (International Economic Review, Vol. 27 (1986), No. 2, pp. 439,444) income share elasticity to provide sufficient conditions on income distribution that support the ,Robinson effect',i.e. such that a negative (positive) relationship between individual income and price elasticity translates into a negative (positive) relationship between mean income and market demand elasticity. The paper also provides a framework to study the effects of distributive shocks on the price elasticity of market demand. [source] Aviation fuel demand modelling in OECD and developing countries: impacts of fuel efficiencyOPEC ENERGY REVIEW, Issue 1 2009Mohammad Mazraati On the quest for reducing the fuel consumption per passenger per flight for economical and environmental reasons, commercial aircraft manufacturers are implementing new strategies for optimising aircraft performance by using new lighter and stronger materials and enhancing engines' efficiencies in terms of fuel consumption and maintenance requirements. With the rising and falling of economies, whether in the Organization for Economic Cooperation and Development (OECD) countries or other developing countries, the aviation industry has been affected by multiple factors such as passenger traffic, freight traffic, airport capacities and oil prices. Aircraft manufacturers have worked on improving the engine efficiency of their newly built airplanes (e.g. Airbus's A-380 and Boeing's B-787), and many airports in the world have increased the number of their runways to face the increasing demand for air traffic in the world. Aviation efficiency can also be achieved through better load management, which in return enables airliners to cope with higher oil prices or rising costs. Aviation fuel demand is modelled in OECD North America, Europe and Pacific regions and some selected developing countries. Price elasticities of fuel demand in all regions are low, while income elasticities are high. The elasticity of aviation fuel demand on passenger kilometre performed (PKP) is considerably low. One per cent increase in PKP leads to less than half a per cent increase in aviation fuel demand, confirming an ongoing fuel efficiency in aviation industry. [source] Effects of the Reform of the Social Medical Insurance System in JapanTHE JAPANESE ECONOMIC REVIEW, Issue 4 2002Atsushi Yoshida We estimate outpatient medical care demand functions and examine the effects of the 1997 reform of the medical insurance system. We focus on the issue of which persons have been most affected by the reform and on the extent to which price elasticities have changed since the reform. The estimation results show that the reform affected mainly dependants' demand for medical care, which implies that all members of the household shared the increase in the medical costs of the head of the household. Price elasticities ranged from ,0.18 to ,0.26 before the reform, and from ,0.08 to ,0.11 after the reform. JEL Classification Numbers: C35, I10, I18. [source] A Box,Cox Double-hurdle ModelTHE MANCHESTER SCHOOL, Issue 2 2000Andrew M. Jones The double-hurdle model with dependence is extended by incorporating the Box,Cox transformation. The model nests a range of popular limited dependent variable models, including the Gaussian double-hurdle, the generalized Tobit, and two-part models. Estimates of US beef consumption suggest that the Box,Cox specification outperforms all other restrictive models. Price elasticities are small and similar to findings in the literature. Household age composition and demographic variables also play significant roles in determining beef consumption. Income and cross-price elasticities are insignificant. [source] Price elasticity of water allocations demand in the Goulburn,Murray Irrigation District,AUSTRALIAN JOURNAL OF AGRICULTURAL & RESOURCE ECONOMICS, Issue 1 2008Sarah Wheeler Bid prices for the demand and supply of water allocations between 2001 and 2007, and average monthly prices paid for water allocations from 1997 to 2007 in the Goulburn,Murray Irrigation District are analysed to estimate price elasticities. Based on bid prices, the price elasticity of demand for water allocations appears highly elastic, with elasticities strongly influenced by the season and drought. The price elasticity of supply for water allocations is also elastic, albeit less elastic than demand. Using actual prices paid, water demand is negatively related to price and is inelastic, and appears to be most influenced by demand the previous month, drought and seasonality factors. [source] Elasticities of market shares and social health insurance choice in germany: a dynamic panel data approachHEALTH ECONOMICS, Issue 3 2007Marcus Tamm Abstract In 1996, free choice of health insurers was introduced to the German social health insurance system. One objective was to increase efficiency through competition. A crucial precondition for effective competition among health insurers is that consumers search for lower-priced health insurers. We test this hypothesis by estimating the price elasticities of insurers' market shares. We use unique panel data and specify a dynamic panel model to explain changes in market shares. Estimation results suggest that short-run price elasticities are smaller than previously found by other studies. In the long-run, however, estimation results suggest substantial price effects. Copyright © 2006 John Wiley & Sons, Ltd. [source] Potato demand in an increasingly organic marketplace,AGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 3 2009Ming-Feng Hsieh The authors investigate pricing and demand issues for four fresh potato categories (russet, red, white, and minor colored), organic fresh potatoes, and two processed potato categories (frozen/refrigerated and dehydrated) using a nonlinear generalized almost ideal demand system (GAIDS) that is closed under unit scaling (CUUS). The model used regionally aggregated at-home consumption data from 2000 to 2005. Estimated uncompensated own price elasticities for fresh potatoes were highly significant and ranged between ,0.5 and ,1.6. The study was designed to capture the effects of the aggregate organic market on the prices, expenditures, and demand for each potato category. Organic food market penetration elasticities suggest that specialty potatoes (organic and minor-colored) are particularly well positioned if demands for organic products continue to rise, red potatoes are not well positioned and evidence of the early warning signs of slippage in market share for white and russet potatoes may exist. Producers and promoters of conventional potato products should account for the increasingly important role of organic products in making decisions. As an auxiliary exercise, we also statistically sourced the variance of the organic potato price premium relative to the other four fresh potato prices. At the present time, the variability of the organic potato premium is not much affected by production costs or other supply-related factors: the premium variability was driven largely by demand, and demographic/seasonal factors. Producers should be cautious about shifting to organic potato production until lower cost practices emerge. [JEL Codes: D120, Q130, Q180]. © 2009 Wiley Periodicals, Inc. [source] Food consumption and demographics in Japan: Implications for an aging populationAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 4 2007Mauricio V.L. Bittencourt This study estimates a cross-sectional model based on the Almost Ideal Demand System (AIDS) to examine the determinants of food consumption patterns in Japan over life-cycle periods. The test of structural changes, the analysis of the effects of demographic characteristics, and the estimation of expenditure and price elasticities are conducted from a random sample of 1,281 households from a Japanese household survey in 1997. Results show that each economic or noneconomic factor has a different impact on food consumption over a lifetime. Changes in consumption of some food groups can be explained by price and income effects where others can be explained by demographic characteristics. Financial constraint is not binding and residential location is likely to have little or no impact on predicting consumers' food choices at different periods of their lives. Other key factors that affect consumption pattern include family size, number of children, lifestyle, and health concern. [EconLit citations: C310, D120, D910.] © 2007 Wiley Periodicals, Inc. Agribusiness 23: 529,551, 2007. [source] Estimating own and cross brand price elasticities, and price,cost margin ratios using store-level daily scanner dataAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 4 2001Junko Kinoshita This article addresses three issues related to Japanese dairy demand analysis. First, an econometric fluid milk demand model is estimated using store-level daily scanner data to determine whether the own-price elasticities are significantly different from previous estimates based on aggregate market-level data. This is important because of the current debate among Japanese dairy industry leaders concerning whether fluid milk is price inelastic or elastic. Own-price elasticity differences between fresh and reconstituted milk products are also examined. Second, milk product cross-price elasticities are estimated to measure the degree, if any, of substitutability between fresh milk and reconstituted milk products. Because most previous studies have relied upon aggregate market-level data, there are no previous estimates of cross-price elasticities for fresh milk and reconstituted milk products. Finally, price,cost margin ratios are estimated for each commodity using a method that does not require cost data, but rather relies on assumptions regarding the degree of competition to derive the price,cost margin ratio [Econlit alphanumeric subject codes: Q110, Q130]. © 2001 John Wiley & Sons, Inc. [source] The demand for electricity in PakistanOPEC ENERGY REVIEW, Issue 1 2009Muhammad Arshad Khan This paper examines the patterns of electricity demand in Pakistan over the period 1970,2006 using autoregressive distributed lag technique to cointegration. Long run and short-run price and income elasticities are examined for the national level and for the three major consumer's categories,households, industry and agriculture. The overall results suggest that income and price elasticities possess expected signs at aggregate and disaggregate levels in the long run as well as in the short run. The error correction terms possess expected negative signs and are highly significant with reasonable magnitudes. Furthermore, the estimated long run and short-run electricity demand functions remains stable over the sample period. The results thus convey important information to the agents operating in the electricity market regarding the pricing policies and helps in planning the future strategy of electricity demand management. [source] Gasoline demand, pricing policy and social welfare in the Islamic Republic of IranOPEC ENERGY REVIEW, Issue 2 2007Majid Ahmadian This study estimates the gasoline demand function for the Islamic Republic of Iran, using the structural time series model over the period 1968-2002, and uses it to estimate the change in social welfare for 2003 and 2004, of a higher gasoline price policy. It is found that short- and long-run demand price elasticities are inelastic, although the response is greater in the long run. Hence, social welfare is estimated to fall because of the higher gasoline price (ceteris paribus). However, allowing all variables in the model to change, social welfare is estimated to increase since the changes in the other variables more than compensate for the negative effects of the policy. [source] CUT-THROAT FRINGE COMPETITION IN AN EMERGING COUNTRY MARKET: TAX EVASION OR THE ABSENCE OF MARKET POWER?,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2009ALBERTO SALVO Brazil's established soft-drink firms recently lost ground to multiple low-price entrants, with small-scale operations and minimal advertising. While incumbents attributed such undercutting to entrants' lower costs from non-compliance with the law, ,generics' counterargued that incumbents' high prices stemmed from unilateral market power rather than cost heterogeneity. By estimating a structural model, I can single-handedly explain established brands' high prices through low equilibrium price elasticities of demand. Tax evasion in the fringe, while plausible, appears to be offset by higher procurement costs or less efficient scale. More generally, a competitive informal sector can alleviate the allocative distortions in certain concentrated industries. [source] ESTIMATING THE RELATIONSHIP BETWEEN IMMIGRANT AND NATIVE WORKERS IN AUSTRALIA: A PRODUCTION THEORY APPROACHAUSTRALIAN ECONOMIC PAPERS, Issue 1 2010JAAI PARASNIS The impact of immigration on labour markets depends, among other factors, on the substitutability or complementarity between immigrants and natives. This relationship is examined by treating migrant and native labour, along with capital, as inputs in production process. Estimated price elasticities of substitution between immigrants and native labour suggest that in Australian context, an increase in the wage rate of one group of workers leads to an increased demand for the other. The estimated elasticities of substitution between immigrant and native workers and the complementary relationship between immigrants and capital provide an insight into the complex effects of immigration. [source] Price elasticity of water allocations demand in the Goulburn,Murray Irrigation District,AUSTRALIAN JOURNAL OF AGRICULTURAL & RESOURCE ECONOMICS, Issue 1 2008Sarah Wheeler Bid prices for the demand and supply of water allocations between 2001 and 2007, and average monthly prices paid for water allocations from 1997 to 2007 in the Goulburn,Murray Irrigation District are analysed to estimate price elasticities. Based on bid prices, the price elasticity of demand for water allocations appears highly elastic, with elasticities strongly influenced by the season and drought. The price elasticity of supply for water allocations is also elastic, albeit less elastic than demand. Using actual prices paid, water demand is negatively related to price and is inelastic, and appears to be most influenced by demand the previous month, drought and seasonality factors. [source] The CES--Translog Production Function, Returns to Scale and AESBULLETIN OF ECONOMIC RESEARCH, Issue 3 2001Kern O. Kymn The translog functional form imposes no a priori restrictions on the substitution possibilities between the factor inputs, by relaxing the assumption of strong separability, and the CES,translog cost function specification allows for testing homothetic technology with Hicks-neutral technical change. In this paper an n -factor CES,translog production function is presented which develops the parameters to directly assess scale effects from those due to technology in the production structure. In addition, by applying Shephard's lemma it was possible to derive the input demand functions, as well as the partial elasticities of substitution and the cross-partial price elasticities of demand for a generalized CES,translog production structure. [source] Demand for Wildlife Hunting in British ColumbiaCANADIAN JOURNAL OF AGRICULTURAL ECONOMICS, Issue 1 2005Lili Sun We present estimates of the demand for hunting licenses by residents and nonresidents in British Columbia for the period 1971,2000. We obtain estimates of both short-run and long-run price elasticities and discuss their revenue implications for future fee increases. We find the demand by nonresidents to be strongly correlated with U.S. income variation over the business cycle, but find no such role for cyclical income variation for resident hunters. The ability of the government to increase revenues from resident hunters turns out to be limited, particularly in the long run, while greater opportunities exist for raising revenues from U.S. hunters as short- and long-run price elasticities of demand are quite inelastic. We argue that conservation surcharges on foreign hunters are one way of capturing more of the resource rent. Nous analysons la demande de permis de chasse par les résidants et les non-résidants de Colombie-Britannique pour la période 1971,2000. Nous présentons des élasticités de court terme et de long terme que nous utilisons ensuite pour évaluer l'effet d'augmenter le coût des permis sur les revenus générés par la vente de ces permis. La demande des non-résidants est fortement corrélée aux fluctuations des revenus américains, mais les variations cycliques du revenu n'ont pas la même incidence sur la demande des chasseurs locaux. La capacité du gouvernement d'augmenter ses revenus en augmentant les coûts des permis des chasseurs locaux est restreinte, surtout à long terme. Ce constat ne s'applique pas aux chasseurs américains puisque leur demande de permis est inélastique, à court terme comme à long terme. Des frais supplémentaires de conservation imposés aux chasseurs étrangers permettraient au gouvernement de s'accaparer une part plus importante de la rente associée à la ressource. [source] A mixed logit model of health care provider choice: analysis of NSS data for rural IndiaHEALTH ECONOMICS, Issue 9 2006Bijan J. Borah Abstract In order to address the persistent problems of access to and delivery of health care in rural India, a better understanding of the individual provider choice decision is required. This paper is an attempt in this direction as it investigates the determinants of outpatient health care provider choice in rural India in the mixed multinomial logit (MMNL) framework. This is the first application of the mixed logit to the modeling of health care utilization. We also use the multiple imputation technique to impute the missing prices of providers that an individual did not visit when she was ill. Using data from National Sample Survey Organization of India, we find the following: price and distance to a health facility play significant roles in health care provider choice decision; when health status is poor, distance plays a less significant role in an adult's provider choice decision; price elasticity of demand for outpatient care varies with income, with low-income groups being more price-sensitive than high-income ones. Furthermore, outpatient care for children is more price-elastic than that for adults, which reflects the socio-economic structure of a typical household in rural India where an adult's health is more important than that of a child for the household's economic sustenance. Copyright © 2006 John Wiley & Sons, Ltd. [source] Estimating the price elasticity of expenditure for prescription drugs in the presence of non-linear price schedules: an illustration from Quebec, CanadaHEALTH ECONOMICS, Issue 9 2005Paul Contoyannis Abstract The price elasticity of demand for prescription drugs is a crucial parameter of interest in designing pharmaceutical benefit plans. Estimating the elasticity using micro-data, however, is challenging because insurance coverage that includes deductibles, co-insurance provisions and maximum expenditure limits create a non-linear price schedule, making price endogenous (a function of drug consumption). In this paper we exploit an exogenous change in cost-sharing within the Quebec (Canada) public Pharmacare program to estimate the price elasticity of expenditure for drugs using IV methods. This approach corrects for the endogeneity of price and incorporates the concept of a ,rational' consumer who factors into consumption decisions the price they expect to face at the margin given their expected needs. The IV method is adapted from an approach developed in the public finance literature used to estimate income responses to changes in tax schedules. The instrument is based on the price an individual would face under the new cost-sharing policy if their consumption remained at the pre-policy level. Our preferred specification leads to expenditure elasticities that are in the low range of previous estimates (between ,0.12 and ,0.16). Naïve OLS estimates are between 1 and 4 times these magnitudes. Copyright © 2005 John Wiley & Sons, Ltd. [source] Expansionary Fiscal Shocks and the US Trade Deficit,INTERNATIONAL FINANCE, Issue 3 2005Christopher J. Erceg In this paper, we use a dynamic general equilibrium model of an open economy to assess the quantitative effects of fiscal shocks on the trade balance in the United States. We examine the effects of two alternative fiscal shocks: a rise in government consumption, and a reduction in the labour income tax rate. Our salient finding is that a fiscal deficit has a relatively small effect on the US trade balance, irrespective of whether the source is a spending increase or tax cut. In our benchmark calibration, we find that a rise in the fiscal deficit of 1 percentage point of gross domestic product (GDP) induces the trade balance to deteriorate by 0.2 percentage point of GDP or less. Noticeably larger effects are only likely to be elicited under implausibly high values of the short-run trade price elasticity, or of the share of liquidity-constrained households in the economy. From a policy perspective, our analysis suggests that even reducing the current US fiscal deficit (of 3% of GDP) to zero would be unlikely to narrow the burgeoning US trade deficit significantly. [source] Consumer sensitivity to changes in tax policy on consumption of alcoholINTERNATIONAL JOURNAL OF CONSUMER STUDIES, Issue 3 2006David E. Smith Abstract Marketers and economists have followed the consumption patterns of alcoholic beverages for many years. Public officials have studied the negative effects of consuming alcohol and have advocated a variety of measures to curtail consumption. Previous studies have also measured the price elasticity. This comparative study is based on a 40-year analysis, and compares the consumption patterns for beer, spirits and wine in three Nordic countries. Although the cultural context of Denmark, Norway and Sweden are similar, nevertheless significant differences in the patterns of consumption and prices for alcoholic beverages have been evidenced overtime. A comparison of the per capita drinking patterns and the taxation effectiveness are presented. Even though the elasticities varied, the data indicate relative sensitivity to price changes and a decline in spirits consumption as well as switching effects to lower alcohol-content beverages. [source] CAPITALIZATION OF GOVERNMENT SUPPORT IN AGRICULTURAL LAND PRICES: WHAT DO WE KNOW?JOURNAL OF ECONOMIC SURVEYS, Issue 4 2009Laure Latruffe Abstract The objective of this paper is to provide an overview of existing literature, both theoretically and empirically, on the extent to which agricultural subsidies do translate into higher land values and rents and finally benefit landowners instead of agricultural producers. Our review shows that agricultural support policy instruments contribute to increasing the rental price of farmland, and that the extent of this increase closely depends on the level of the supply price elasticity of farmland relative to those of other factors/inputs on the one hand, and on the range of the possibilities of factor/input substitution in agricultural production on the other hand. The empirical literature shows that land prices and rents have in general a significant positive and inelastic response to government support. Such inelastic response is thought to reflect the uncertain future of the farm programmes. And in general, studies have indicated that land prices are more responsive to government-based returns than to market-based returns. [source] Health Insurance, Moral Hazard, and Managed CareJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 1 2002Ching-To Albert Ma If an illness is not contractible, then even partially insured consumers demand treatment for it when the benefit is less than the cost, a condition known as moral hazard. Traditional health insurance, which controls moral hazard with copayments (demand management), can result in either a deficient or an excessive provision of treatment relative to ideal insurance. In particular, treatment for a low-probability illness is deficient if illness per se has little effect on the consumer's marginal utility of income and if the consumer's price elasticity of expected demand for treatment is large relative to the risk-spreading distortion when these are evaluated at a copayment that brings forth the ideal provision of treatment. Managed care, which controls moral hazard with physician incentives, can either increase or decrease treatment delivery relative to traditional insurance, depending on whether demand management results in deficient or excessive treatment. [source] Price dynamics in the Bangladesh rice market: implications for public interventionAGRICULTURAL ECONOMICS, Issue 1 2003Donna Brennan Commodity price stabilisation; Food policy Abstract In this paper, the price dynamics of a rice market are examined using dynamic programming techniques. The model is parameterised to the case of Bangladesh and thus represents the situation of a very poor country which has characteristically high price elasticity (due to income effects) and high storage and interest costs. The incentives for private sector storage and its impact on price stability are examined. Various options for public intervention in the storage sector are also explored, including price ceiling schemes and subsidisation of storage costs. Results show that interventions that remove private disincentives (such as storage subsidies) are much cheaper than direct intervention by government, but the impact on the probability distribution of prices is quite different. The effect of trade on the probability distribution of prices is also examined. [source] Alcohol Price and Intoxication in College BarsALCOHOLISM, Issue 11 2009Ryan J. O'Mara Background:, Many population studies find that alcohol prices are inversely related to alcohol consumption and alcohol-related problems, including among college students and young adults. Yet, little is known about the "micro-level" effects of alcohol price on the behavior of individual consumers in natural drinking settings such as college bars. Therefore, we assessed patron's cost per gram of ethanol consumed at on-premise drinking establishments and its association with intoxication upon leaving an establishment. Methods:, On 4 consecutive nights during April 2008, data were collected from 804 patrons exiting 7 on-premise establishments in a bar district located adjacent to a large university campus in the southeastern United States. Anonymous interview and survey data were collected as well as breath alcohol concentration (BrAC) readings. We calculated each patron's expenditures per unit of ethanol consumed based on self-reported information regarding the type, size, number, and cost of consumed drinks. Results:, A multivariable model revealed that a 10-cent increase in cost per gram of ethanol at on-premise establishments was associated with a 30% reduction in the risk of exiting an establishment intoxicated (i.e., BrAC , 0.08 g/210 l). Conclusions:, The results are consistent with economic theory and population-level research regarding the price elasticity of alcoholic beverages, which show that increases in alcohol prices are accompanied by less alcohol consumption. These findings suggest that stricter regulation of the drink discounting practices of on-premise drinking establishments would be an effective strategy for reducing the intoxication levels of exiting patrons. [source] The Effects of Uncertainty on the Demand for Health InsuranceJOURNAL OF RISK AND INSURANCE, Issue 1 2004atay Koç This article analyzes the effects of uncertainty and increases in risk aversion on the demand for health insurance using a theoretical model that highlights the interdependence between insurance and health care demand decisions. Two types of uncertainty faced by the individuals are examined. The first one is the uncertainty in the consumer's pretreatment health and the second is the uncertainty surrounding the productivity of health care. Comparative statics results are reported indicating the impact on the demand for insurance of shifts in the distributions of pretreatment health and productivity of health care in the form of first-order stochastic dominance, Rothschild,Stiglitz mean-preserving spreads, and second-order stochastic dominance. The demand for insurance increases in response to a Rothschild,Stiglitz increase in risk in the distribution of the pretreatment health provided that the health production function is in a special class and the price elasticity of health care is nondecreasing in the pretreatment health. Provided also that the demand for health care is own-price inelastic, the same conclusion is obtained when the uncertainty is about the productivity of health care. [source] The responsiveness of remittances to price of oil: the case of the GCCOPEC ENERGY REVIEW, Issue 3-4 2009George S. Naufal We investigate the responsiveness of remittances from the Gulf Cooperation Council (GCC) countries to the changes in the price of crude oil. Most of the GCC countries rank in the top 20 remitting countries in the world. We find that oil price elasticity of remittances is around 0.4. While most studies have examined the impact of remittances on the real economic activities in the receiving countries, this study emphasises the impact of remittances on the remitting countries. We examine various policy implications with regard to macroeconomic shocks, monetary policy and fiscal policy of the GCC countries. [source] Transportation demand for petroleum products in Indonesia: a time series analysisOPEC ENERGY REVIEW, Issue 2 2009Suleiman Sa'ad This paper used annual time series data for the period 1973 to 2007 in two econometric techniques [the structural time series model (STSM) and unrestricted error correction model (UECM)] developed to estimate petroleum products (gasoline and diesel) and demand functions for the transportation sector of Indonesia and make a forecast of per capita consumption of the total products until the year 2030 under three scenarios. The results from both models revealed that the demand for petroleum products are price inelastic, with an estimated long-run price elasticity of ,0.19 in the STSM and ,0.16 in the UECM. However, total petroleum is income elastic in the long run with a long-run income elasticity of 0.97 under the STSM and 0.88 in the UECM. The estimated demand functions are used to construct a projection of future transportation demand for petroleum products until 2030 under three alternative scenarios: business as usual, low case scenario and high case scenario. The results of this exercise suggests that by 2030, the demand for total petroleum products per capita for Indonesia will increase to about 0.498 toe in the STSM and 0.476 toe in the UECM under the baseline scenario, 0.197 toe in the STSM and 0.186 toe in the UECM under low case scenario and finally, 0.976 toe in the STSM and 0.886 toe under high case scenario. [source] Dynamics of petroleum markets in OECD countries in a monthly VAR,VEC model (1995,2007)OPEC ENERGY REVIEW, Issue 1 2008Mehdi Asali This paper contains some results of a study in which the dynamics of petroleum markets in the Organization for Economic Cooperation and Development (OECD) is investigated through a vector auto regression (VAR),vector error correction model. The time series of the model comprises the monthly data for the variables demand for oil in the OECD, WTI in real term as a benchmark oil price, industrial production in OECD as a proxy for income and commercial stocks of crude oil and oil products in OECD for the time period of January 1995 to September 2007. The detailed results of this empirical research are presented in different sections of the paper; nevertheless, the general result that emerges from this study could be summarised as follows: (i) there is convincing evidence of the series being non-stationary and integrated of order one I(1) with clear signs of co-integration relations between the series; (ii) the VAR system of the empirical study appears stable and restores its dynamics as usual, following a shock to the rate of changes of different variables of the model, taking between five and eight periods (months in our case); (iii) we find the lag length of 2 as being optimal for the estimated VAR model; (iv) significant impact of changes in the commercial crude and products' inventory level on oil price and on demand for oil is highlighted in our empirical study and in different formulations of the VAR model, indicating the importance of the changes in the stocks' level on oil market dynamics; and (v) income elasticity of deman for oil appears to be prominent and statistically significant in most estimated models of the VAR system in the long run, while price elasticity of demand for oil is found to be negligible and insignificant in the short run. However, while aggregate oil consumption does not appear to be very sensitive to the changes of oil prices (which is believed to be because of the so-called ,rebound effect' of oil (energy) efficiency in the macro level) in the macro level, the declining trend of oil intensity (oil used for production of unit value of goods and services), particularly when there is an upward trend in oil price, clearly indicates the channels through which persistent changes in oil prices could affect the demand for oil in OECD countries. [source] Income Distribution, Price Elasticity and the ,Robinson Effect'THE MANCHESTER SCHOOL, Issue 5 2004Corrado Benassi In The Economics of Imperfect Competition, Joan Robinson argued that an increase of the consumers' incomes should make demand less elastic,which, although reasonable about individual demand as an assumption on preferences, suggests a role for income distribution as far as market demand is concerned. We use Esteban's (International Economic Review, Vol. 27 (1986), No. 2, pp. 439,444) income share elasticity to provide sufficient conditions on income distribution that support the ,Robinson effect',i.e. such that a negative (positive) relationship between individual income and price elasticity translates into a negative (positive) relationship between mean income and market demand elasticity. The paper also provides a framework to study the effects of distributive shocks on the price elasticity of market demand. [source] An empirical investigation of the welfare effects of banning wholesale price discriminationTHE RAND JOURNAL OF ECONOMICS, Issue 1 2009Sofia Berto Villas-Boas Economic theory does not provide sharp predictions on the welfare effects of banning wholesale price discrimination: if downstream cost differences exist, then discrimination shifts production inefficiently, toward high-cost retailers, so a ban increases welfare; if differences in price elasticity of demand across retailers exist, discrimination may increase welfare if quantity sold increases, so a ban reduces welfare. Using retail prices and quantities of coffee brands sold by German retailers, I estimate a model of demand and supply and separate cost and demand differences. Simulating a ban on wholesale price discrimination has positive welfare effects in this market, and less if downstream cost differences shrink, or with less competition. [source] | ||||||||||||||||||||||||||||