We explore a methodological improvement to the standard dynamic demand model for petrol–a general model which allows for slowly evolving, unobservable habits. If this habit formation model is correct, then standard estimation techniques produce inconsistent estimates. We find price elasticities of -0.13 (short-run) and -0.20 (long-run). Importantly, standard techniques are misleading about the ...

OBJECTIVE To estimate the price elasticity of cigarette demand among youth in low- and middle-income countries (LMIC). DATA The Global Youth Tobacco Survey was used to obtain data on the smoking behaviour of 315,353 adolescents from 17 LMIC. DESIGN Two-part model of cigarette demand with country fixed effects. The first part estimates the impact of prices on smoking participation while the ...

BACKGROUND Few studies have examined the impact of tobacco tax and price policies in China. In addition, very little is known about the differential responses to tax and price increases based on socioeconomic status in China. OBJECTIVE To estimate the conditional cigarette consumption price elasticity among adult urban smokers in China and to examine the differential responses to cigarette pr...

We analyze the welfare impacts of price discrimination in a two-dimensional spatial differentiation model. Consumer information of varying qualities is available on one dimension which allows firms to price discriminate, and better information leads to more refined price discrimination. We find that as information quality improves, firms’ profits monotonically increase while consumer surplus an...

Incorporating a household’s net sale status into a rearranged Slutsky equation with combined ordinary and endowment income effects, this paper aims to reinterpret the income elasticity of demand in the case of buying and selling and to associate it with types of goods in a novel manner. To this end, the Deaton’s (1989) net benefit ratio (NBR) approach is expressed as the difference between orig...

Recent empirical evidence shows the Law of One Price does not exist in online environment despite the unprecedented amount of price transparency. The failure of Law of One Price has been attributed to search costs, brand loyalty and other kinds of “market frictions” that enable retailers to keep some of their customers even if they don’t charge the lowest price in the market. While the presence...

The price transmission from the international market to the domestic market of tunas was investigated in the present research. For this purpose, the elasticity of substitution between tuna imports with goods produced in Iran (Armington Elasticity) was calculated. Armington elasticity reflects a degree of substitution between commodities produced domestically and those produced abroad. A greater...

Demand theory can be applied to analyse how a human or animal consumer changes her selection of commodities within a certain budget in response to changes in price of those commodities. This change in consumption assessed over a range of prices is defined as demand elasticity. Previously, income-compensated and income-uncompensated price changes have been investigated using human and animal con...

in this study, first we evaluate the total amount of support for domestic cotton (ams) for the years 1988 to 1999. then, using time series data for the study years, translog cost function was constrained. having calculated the price elasticity of demand for farm inputs, farmers’ reactions to price changes due to the price liberalization were identified. the results of study showed that in the w...

OBJECTIVE To estimate the long-term and short-term effects on cigarette demand in Argentina based on changes in cigarette price and income per person >14 years old. METHOD Public data from the Ministry of Economics and Production were analysed based on monthly time series data between 1994 and 2010. The econometric analysis used cigarette consumption per person >14 years of age as the depende...