The real-time price elasticity of electricity

NARCIS (Netherlands)

Lijesen, M.G.

2007-01-01

The real-time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices. Despite the importance, empirical estimates of the real-time elasticity are hardly available. This paper provides a quantification of the real-time

Price Elasticity of Alcohol Demand in India.

Science.gov (United States)

Kumar, Santosh

2017-05-01

Using a household survey conducted in 2014, this study estimates price elasticity of demand (PED) for beer, country liquor and spirits in India. Ordinary least-square models were used to estimate the responsiveness in alcohol demand due to price change. A large number of control variables were included to adjust for potential confounding in the model. Inter-district variation in alcohol consumption is adjusted for by including district fixed effects. Alcohol prices are negatively associated with demand for alcoholic beverages. The PED ranged from -0.14 for spirits to -0.46 for country liquor. Low level of education was positively associated with spirits consumption. The magnitude of elasticity varied by rural-urban, education and gender. Results indicate that a policy mix of price controls and awareness campaigns would be most effective in tackling the adverse effects of harmful drinking in India. The demand for beer, country liquor and spirits is negatively associated with its own price. The elasticity estimates ranged from -0.14 for spirits to -0.44 for country liquor. The elasticity estimates varied by rural-urban, gender and by education levels of the drinkers. © The Author 2017. Medical Council on Alcohol and Oxford University Press. All rights reserved

Relationship between the Uncompensated Price Elasticity and the Income Elasticity of Demand under Conditions of Additive Preferences.

Science.gov (United States)

Sabatelli, Lorenzo

2016-01-01

Income and price elasticity of demand quantify the responsiveness of markets to changes in income and in prices, respectively. Under the assumptions of utility maximization and preference independence (additive preferences), mathematical relationships between income elasticity values and the uncompensated own and cross price elasticity of demand are here derived using the differential approach to demand analysis. Key parameters are: the elasticity of the marginal utility of income, and the average budget share. The proposed method can be used to forecast the direct and indirect impact of price changes and of financial instruments of policy using available estimates of the income elasticity of demand.

Price elasticity of expenditure across health care services.

Science.gov (United States)

Duarte, Fabian

2012-12-01

Policymakers in countries around the world are faced with rising health care costs and are debating ways to reform health care to reduce expenditures. Estimates of price elasticity of expenditure are a key component for predicting expenditures under alternative policies. Using unique individual-level data compiled from administrative records from the Chilean private health insurance market, I estimate the price elasticity of expenditures across a variety of health care services. I find elasticities that range between zero for the most acute service (appendectomy) and -2.08 for the most elective (psychologist visit). Moreover, the results show that at least one third of the elasticity is explained by the number of visits; the rest is explained by the intensity of each visit. Finally, I find that high-income individuals are five times more price sensitive than low-income individuals and that older individuals are less price-sensitive than young individuals. Copyright © 2012 Elsevier B.V. All rights reserved.

Relationship between the Uncompensated Price Elasticity and the Income Elasticity of Demand under Conditions of Additive Preferences.

Directory of Open Access Journals (Sweden)

Lorenzo Sabatelli

Full Text Available Income and price elasticity of demand quantify the responsiveness of markets to changes in income and in prices, respectively. Under the assumptions of utility maximization and preference independence (additive preferences, mathematical relationships between income elasticity values and the uncompensated own and cross price elasticity of demand are here derived using the differential approach to demand analysis. Key parameters are: the elasticity of the marginal utility of income, and the average budget share. The proposed method can be used to forecast the direct and indirect impact of price changes and of financial instruments of policy using available estimates of the income elasticity of demand.

Price and income elasticities of residential energy demand in Germany

International Nuclear Information System (INIS)

Schulte, Isabella; Heindl, Peter

2017-01-01

We apply a quadratic expenditure system to estimate price and expenditure elasticities of residential energy demand (electricity and heating) in Germany. Using official expenditure data from 1993 to 2008, we estimate an expenditure elasticity for electricity of 0.3988 and of 0.4055 for space heating. The own price elasticity for electricity is −0.4310 and −0.5008 in the case of space heating. Disaggregation of households by expenditure and socio-economic composition reveals that the behavioural response to energy price changes is weaker (stronger) for low-income (top-income) households. There are considerable economies of scale in residential energy use but scale effects are not well approximated by the new OECD equivalence scale. Real increases in energy prices show a regressive pattern of incidence, implying that the welfare consequences of direct energy taxation are larger for low income households. The application of zero-elasticities in assessments of welfare consequences of energy taxation strongly underestimates potential welfare effects. The increase in inequality is 22% smaller when compared to the application of disaggregated price and income elasticities as estimated in this paper. - Highlights: • We estimate price, income, and expenditure elasticities for residential energy demand in Germany. • We differentiate elasticities by income groups and household type. • Electricity and space heating are necessary goods since the expenditure elasticities are smaller than unity. • Low-income households show a weaker reaction to changing prices when compared to high-income households. • Direct energy taxation has regressive effects, meaning that larger burdens fall upon low-income households.

A meta-analysis on the price elasticity of energy demand

International Nuclear Information System (INIS)

Labandeira, Xavier; Labeaga, José M.; López-Otero, Xiral

2017-01-01

Price elasticities of energy demand have become increasingly relevant in estimating the socio-economic and environmental effects of energy policies or other events that influence the price of energy goods. Since the 1970s, a large number of academic papers have provided both short and long-term price elasticity estimates for different countries using several models, data and estimation techniques. Yet the literature offers a rather wide range of estimates for the price elasticities of demand for energy. This paper quantitatively summarizes the recent, but sizeable, empirical evidence to facilitate a sounder economic assessment of (in some cases policy-related) energy price changes. It uses meta-analysis to identify the main factors affecting short and long term elasticity results for energy, in general, as well as for specific products, i.e., electricity, natural gas, gasoline, diesel and heating oil. - Highlights: • An updated and wider meta-analysis on price elasticities of energy demand. • Energy goods are shown to be price inelastic both in the short and long-term. • Results are relevant for a proper design and implementation of energy policies. • Our results refer to energy, as a whole, and specific energy goods.

The Calculation of Weighted Price Elasticity of Tax: Turkey (1998-2013

Directory of Open Access Journals (Sweden)

Engin YILMAZ

2015-06-01

Full Text Available In this study, the assumption of “the weighted price elasticity of tax is a unit in the developing countries” suggested in the first studies which examine the impacts of the inflation on tax revenues, will be reevaluated for Turkey in the period of 1998-2013. We use Turkish tax and price index data for calculating the weighted price elasticity of tax. Via the method of dynamic ordinary least squares (DOLS, the long run weighted price elasticity of tax system is guessed. The importance of this study is the fact that this is first study intended to the calculation of the weighted price elasticity of tax for Turkey. In this sense, it will be instructive study for the reconsideration of the assumption of “the weighted price elasticity of tax is a unit in the developing countries”.

Meta-Analysis of Price Elasticity for Urban Domestic Water Consumption in Iran

Directory of Open Access Journals (Sweden)

Mina Tajabadi

2018-03-01

Full Text Available Price elasticity plays a critical role in determining water tariff and its system. Many economic decision makers and researchers have estimated demand function for different cities in order to predict the associated income and price elasticity. In this research we reviewed 20 studies on urban domestic water demand function from which 63 price elasticity values were obtained. Since the price elasticity values obtained from these studies had significant statistical differences, the aim of this research is to determine the effective factors in price elasticity values as well as to analyze differences in such values using meta-analysis technique. The meta-analysis technique focuses on variation in water price elasticity results. The statistical meta-analysis technique focuses on two main objectives of publication bias or publication heterogeneity in reported results. The results indicated that publication bias is negligible while publication heterogeneity is significant. The major factors affecting price elasticity values are classified into 4 categories including theoretical, model, data and socio-geographical specifications. The result indicated that variables such as income, time-series datasets, natural logarithm function and use of stone-geary theory which is the basis for predicting many domestic water demand functions, significantly overestimate the price elasticity values. Also the geographical condition of the region, population density and use of OLS technique to estimate the demand parameters underestimates the price elasticity values.

Drilling rates and expected oil prices: The own price elasticity of US oil supply

International Nuclear Information System (INIS)

Kaufmann, R.K.; Gruen, W.; Montesi, R.

1994-01-01

This paper evaluates the feasibility of policies to increase exploration and development by the oil industry. To do so, the authors estimate a new model for well completions in the United States that includes the effect of price expectations from survey data, that separates exploratory from development wells, and that uses a deflator based on the cost of drilling a well. The regression results indicate that the price elasticity of drilling is considerably smaller than previous estimates. When combined with recent analyses of drilling success, the results indicate that the own price elasticity of US oil supply is relatively small. The low price elasticity of supply indicates that efforts to increase domestic oil supplies by increasing well completions may be more expensive than believed previously

Differences in price elasticities of demand for health insurance: a systematic review.

Science.gov (United States)

Pendzialek, Jonas B; Simic, Dusan; Stock, Stephanie

2016-01-01

Many health insurance systems apply managed competition principles to control costs and quality of health care. Besides other factors, managed competition relies on a sufficient price-elastic demand. This paper presents a systematic review of empirical studies on price elasticity of demand for health insurance. The objective was to identify the differing international ranges of price elasticity and to find socio-economic as well as setting-oriented factors that influence price elasticity. Relevant literature for the topic was identified through a two-step identification process including a systematic search in appropriate databases and further searches within the references of the results. A total of 45 studies from countries such as the USA, Germany, the Netherlands, and Switzerland were found. Clear differences in price elasticity by countries were identified. While empirical studies showed a range between -0.2 and -1.0 for optional primary health insurance in the US, higher price elasticities between -0.6 and -4.2 for Germany and around -2 for Switzerland were calculated for mandatory primary health insurance. Dutch studies found price elasticities below -0.5. In consideration of all relevant studies, age and poorer health status were identified to decrease price elasticity. Other socio-economic factors had an unclear impact or too limited evidence. Premium level, range of premiums, homogeneity of benefits/coverage and degree of forced decision were found to have a major influence on price elasticity in their settings. Further influence was found from supplementary insurance and premium-dependent employer contribution.

Price elasticity of petroleum products in selected African countries

International Nuclear Information System (INIS)

Kaul, S.

1995-01-01

In this paper, a fundamental understanding of the economic impact which is directly related to the price elasticity of petroleum products in six selected African countries is obtained by using the Jorgorson-Lian model for shares. Each kind of fuel price has a different impact on the share of oil products for the different countries. The price increase of one kind of fuel may increase or decrease the share of another fuel in the total oil products. In the oil importing African countries, the price of one product is relatively inelastic, whereas in the oil producing African countries, the price is elastic. (Author)

Two Propositions on the Application of Point Elasticities to Finite Price Changes.

Science.gov (United States)

Daskin, Alan J.

1992-01-01

Considers counterintuitive propositions about using point elasticities to estimate quantity changes in response to price changes. Suggests that elasticity increases with price along a linear demand curve, but falling quantity demand offsets it. Argues that point elasticity with finite percentage change in price only approximates percentage change…

R&D and Price Elasticity of Demand

DEFF Research Database (Denmark)

Lucke, D.; Schröder, Philipp; D., Schumacher,

2004-01-01

This paper explores the relationship between the price elasticity of demand and the R&D intensity of the product. We introduce the concept of R&D intensity into a standard Dixit-Stiglitz/Krugman-type setting. R&D activity is treated as a fixed cost of production. Within this framework, sectors...... with a higher R&D intensity show a lower price elasticity of demand. This proposition is confirmed by an empirical investigation of export demand for manufactured goods from major industrialised countries. Consequently, real exchange rate changes have an impact on the commodity structure of exports....

The elasticity of substitution of superlative price indices

OpenAIRE

Petter Frenger

2005-01-01

Abstract: The paper presents a method for computing the curvature implicit in the use of superlative price indices. It extends the quadratic lemma and allows us to compute the elasticity of substitution of the underlying preferences in the direction of the observed price change for the Törnqvist and the quadratic mean of order r indices. It derives the expressions for the directional shadow elasticity of substitution and applies the results to the Norwegian CPI data base. Ke...

Price elasticity and medication use: cost sharing across multiple clinical conditions.

Science.gov (United States)

Gatwood, Justin; Gibson, Teresa B; Chernew, Michael E; Farr, Amanda M; Vogtmann, Emily; Fendrick, A Mark

2014-11-01

To address the impact that out-of-pocket prices may have on medication use, it is vital to understand how the demand for medications may be affected when patients are faced with changes in the price to acquire treatment and how price responsiveness differs across medication classes.  To examine the impact of cost-sharing changes on the demand for 8 classes of prescription medications. This was a retrospective database analysis of 11,550,363 commercially insured enrollees within the 2005-2009 MarketScan Database. Patient cost sharing, expressed as a price index for each medication class, was the main explanatory variable to examine the price elasticity of demand. Negative binomial fixed effect models were estimated to examine medication fills. The elasticity estimates reflect how use changes over time as a function of changes in copayments. Model estimates revealed that price elasticity of demand ranged from -0.015 to -0.157 within the 8 categories of medications (P  less than  0.01 for 7 of 8 categories). The price elasticity of demand for smoking deterrents was largest (-0.157, P  less than  0.0001), while demand for antiplatelet agents was not responsive to price (P  greater than 0.05). The price elasticity of demand varied considerably by medication class, suggesting that the influence of cost sharing on medication use may be related to characteristics inherent to each medication class or underlying condition.

Trends in income and price elasticities of transport demand (1850–2010)

International Nuclear Information System (INIS)

Fouquet, Roger

2012-01-01

The purpose of this paper is to estimate trends in income and price elasticities and to offer insights for the future growth in transport use, with particular emphasis on the impact of energy and technological transitions. The results indicate that income and price elasticities of passenger transport demand in the United Kingdom were very large (3.1 and −1.5, respectively) in the mid-nineteenth century, and declined since then. In 2010, long run income and price elasticity of aggregate land transport demand were estimated to be 0.8 and −0.6. These trends suggest that future elasticities related to transport demand in developed economies may decline very gradually and, in developing economies, where elasticities are often larger, they will probably decline more rapidly as the economies develop. Because of the declining trends in elasticities, future energy and technological transitions are not likely to generate the growth rates in energy consumption that occurred following transitions in the nineteenth century. Nevertheless, energy and technological transitions, such as the car and the airplane, appear to have delayed and probably will delay declining trends in income and price elasticity of aggregate transport demand. - Highlights: ► Estimates trends in income and price elasticities of aggregate UK land transport demand (1850–2010). ► Income and price elasticities were very large in late 1800s and declined since then. ► In 2010, they were estimated to be 0.8 and −0.6. ► Future elasticities are likely to decline gradually in developed economies and faster in developing economies. ► Energy transitions may delay the decline in elasticities.

Income and price elasticities of electricity demand: Aggregate and sector-wise analyses

Energy Technology Data Exchange (ETDEWEB)

Jamil, Faisal, E-mail: fsljml@hotmail.com [School of Economics, Quaid-e-Azam University, Islamabad (Pakistan); Ahmad, Eatzaz, E-mail: eatzaz@qau.edu.pk [School of Economics, Quaid-e-Azam University, Islamabad (Pakistan)

2011-09-15

Cointegration and vector error correction modeling approaches are widely used in electricity demand analysis. The study rigorously examines the determinants of electricity demand at aggregate and sectoral levels in Pakistan. In the backdrop of severe electricity shortages, our empirical findings give support to the existence of a stable long-run relationship among the variables and indicate that electricity demand is elastic in the long run to both income and price at aggregate level. At sectoral level, long-run income and price elasticity estimates follow this pattern except in agricultural sector, where electricity demand is found elastic to output but inelastic to electricity price. On the contrary, the coefficients for income and price are rather small and mostly insignificant in the short run. We employed temperature index, price of diesel oil and capital stock at aggregate and sectoral levels as exogenous variables. These variables account for most of the variations in electricity demand in the short run. It shows that mechanization of the economy significantly affect the electricity demand at macro level. Moreover, elastic electricity demand with respect to electricity price in most of the sectors implies that electricity price as a policy tool can be used for efficient use and conservation. - Highlights: > The study conducts analysis for aggregate and four sectors. > Sectoral analyses are for residential, commercial, manufacturing and agricultural sectors. > We obtained higher positive income and negative price elasticity in the long run. > The higher price elasticity implies that price can be used as a policy tool. > Capital stock and temperature variables explain most of the short-run demand fluctuations.

On Teaching Price Elasticity of Demand and Change in Revenue due to Price Change -- A Synthesis with and without Calculus

OpenAIRE

Jong-Shin Wei

2013-01-01

Price elasticity of demand measures how much, in terms of percentage change, the quantity demanded responds to a change in price. In this pedagogical note, first we intuitively introduce the very first notion of price elasticity, which is a directional measure because it describes the impact of an arbitrary change in price from one to another on the percentage change in quantity demanded. Next, we show how this measure becomes "point" price elasticity of demand when demand is linear. Finally,...

Price elasticity estimates for tobacco products in India.

Science.gov (United States)

John, Rijo M

2008-05-01

The tax base of tobacco in India is heavily dependent on about 14% of tobacco users, who smoke cigarettes. Non-cigarette tobacco products accounting for 85% of the tobacco consumption contributes only 15% of the total tobacco taxes. Though taxation is an important tool to regulate consumption of tobacco, there have been no estimates of price elasticities for different tobacco products in India to date, which can guide tax policy on tobacco. This paper, for the first time in India, examines the price elasticity of demand for bidis, cigarettes and leaf tobacco at the national level using a representative cross-section of households. This study found that own-price elasticity estimates of different tobacco products in India ranged between -0.4 to -0.9, with bidis (an indigenous hand-rolled smoked tobacco preparation in India) and leaf tobacco having elasticities close to unity. Cigarettes were the least price elastic of all. With some assumptions, it is shown that the tax on bidis can be increased to Rs. 100 per 1000 sticks compared with the current Rs. 14 and the tax on an average cigarette can be increased to Rs. 3.5 per stick without any fear of losing revenue. The paper argues that the current system of taxing cigarettes in India based on the presence of filters and the length of cigarettes has no justification on health grounds, and should be abolished, if reducing tobacco consumption and the consequent disease burden is one of the objectives of tobacco taxation policy. It also argues that attempts to regulate tobacco use without effecting significant tax increases on bidis may not produce desired results.

Examining the short-run price elasticity of gasoline demand in the United States

Science.gov (United States)

Brannan, Michael James

Estimating the consumer demand response to changes in the price of gasoline has important implications regarding fuel tax policies and environmental concerns. There are reasons to believe that the short-run price elasticity of gasoline demand fluctuates due to changing structural and behavioral factors. In this paper I estimate the short-run price elasticity of gasoline demand in two time periods, from 2001 to 2006 and from 2007 to 2010. This study utilizes data at both the national and state levels to produce estimates. The short-run price elasticities range from -0.034 to -0.047 during 2001 to 2006, compared to -0.058 to -0.077 in the 2007 to 2010 period. This paper also examines whether there are regional differences in the short-run price elasticity of gasoline demand in the United States. However, there appears to only be modest variation in price elasticity values across regions.

Income and price elasticities of electricity demand: Aggregate and sector-wise analyses

International Nuclear Information System (INIS)

Jamil, Faisal; Ahmad, Eatzaz

2011-01-01

Cointegration and vector error correction modeling approaches are widely used in electricity demand analysis. The study rigorously examines the determinants of electricity demand at aggregate and sectoral levels in Pakistan. In the backdrop of severe electricity shortages, our empirical findings give support to the existence of a stable long-run relationship among the variables and indicate that electricity demand is elastic in the long run to both income and price at aggregate level. At sectoral level, long-run income and price elasticity estimates follow this pattern except in agricultural sector, where electricity demand is found elastic to output but inelastic to electricity price. On the contrary, the coefficients for income and price are rather small and mostly insignificant in the short run. We employed temperature index, price of diesel oil and capital stock at aggregate and sectoral levels as exogenous variables. These variables account for most of the variations in electricity demand in the short run. It shows that mechanization of the economy significantly affect the electricity demand at macro level. Moreover, elastic electricity demand with respect to electricity price in most of the sectors implies that electricity price as a policy tool can be used for efficient use and conservation. - Highlights: → The study conducts analysis for aggregate and four sectors. → Sectoral analyses are for residential, commercial, manufacturing and agricultural sectors. → We obtained higher positive income and negative price elasticity in the long run. → The higher price elasticity implies that price can be used as a policy tool. → Capital stock and temperature variables explain most of the short-run demand fluctuations.

Reference-based transitions in short-run price elasticity

NARCIS (Netherlands)

K.H. Pauwels (Koen); Ph.H.B.F. Franses (Philip Hans); S. Srinivasan (Shuba)

2003-01-01

textabstractMarketing literature has long recognized that price response need not be monotonic and symmetric, but has yet to provide generalizable market-level insights on reference price type, asymmetric thresholds and sign and magnitude of elasticity transitions. In this paper, we introduce smooth

Price Elasticities of Food Demand: Compensated vs Uncompensated.

Science.gov (United States)

Clements, Kenneth W; Si, Jiawei

2016-11-01

Two recent studies have provided a comprehensive review/summary of a large number of estimates of the price elasticity of food consumption using a meta-regression approach. In this letter, we introduce a way of removing the income effect from these elasticities to recover the compensated elasticities. Although the income effect is small, the compensated elasticities vary by income group. Both types of elasticity should possibly be considered when assessing the impact of policy changes on food consumption. Copyright © 2015 John Wiley & Sons, Ltd. Copyright © 2015 John Wiley & Sons, Ltd.

Price elasticity of natural gas demand in the power generation sector

International Nuclear Information System (INIS)

McArdle, P.F.

1990-01-01

Today, the demand for energy by the electric generation sector is highly competitive and price-responsive. Previous estimates of the price elasticity of natural gas demand in this sector have focused primarily on data from the 1960s and 1970s. Such estimates fail to take full account of economic, regulatory, and legislative developments that have altered the structure of the electric generation market during the 1980s. Structural changes include an increased ability of utilities to choose among generating options, the increase in non-utility generators, the amending of the Fuel Use Act, and a more competitive market for electricity. An accurate estimate of price elasticity requires a refocusing on data from the post-1983 period. The purpose of this paper is to answer two questions: how price responsive (elastic) is natural gas demand in this market; and what changes in natural gas demand elasticity have occurred over time

The impact of food prices on consumption: a systematic review of research on the price elasticity of demand for food.

Science.gov (United States)

Andreyeva, Tatiana; Long, Michael W; Brownell, Kelly D

2010-02-01

In light of proposals to improve diets by shifting food prices, it is important to understand how price changes affect demand for various foods. We reviewed 160 studies on the price elasticity of demand for major food categories to assess mean elasticities by food category and variations in estimates by study design. Price elasticities for foods and nonalcoholic beverages ranged from 0.27 to 0.81 (absolute values), with food away from home, soft drinks, juice, and meats being most responsive to price changes (0.7-0.8). As an example, a 10% increase in soft drink prices should reduce consumption by 8% to 10%. Studies estimating price effects on substitutions from unhealthy to healthy food and price responsiveness among at-risk populations are particularly needed.

On the multiplicity of option prices under CEV with positive elasticity of variance

NARCIS (Netherlands)

Veestraeten, D.

2017-01-01

The discounted stock price under the Constant Elasticity of Variance model is not a martingale when the elasticity of variance is positive. Two expressions for the European call price then arise, namely the price for which put-call parity holds and the price that represents the lowest cost of

On the multiplicity of option prices under CEV with positive elasticity of variance

NARCIS (Netherlands)

Veestraeten, D.

2014-01-01

The discounted stock price under the Constant Elasticity of Variance (CEV) model is a strict local martingale when the elasticity of variance is positive. Two expressions for the European call price then arise, namely the risk-neutral call price and an alternative price that is linked to the unique

Analysis of price and income elasticities for cereals food crops in an ...

African Journals Online (AJOL)

The objective of the study is to estimate the price and income elasticities of cereals food crops in the study area. The results of the price and income elasticities of demand suggest that urban households in general are responsive to changes in own price and income in adjusting their consumption patterns. It was shown that ...

What Happens to Patterns of Food Consumption when Food Prices Change? Evidence from A Systematic Review and Meta-Analysis of Food Price Elasticities Globally.

Science.gov (United States)

Cornelsen, Laura; Green, Rosemary; Turner, Rachel; Dangour, Alan D; Shankar, Bhavani; Mazzocchi, Mario; Smith, Richard D

2015-12-01

Recent years have seen considerable interest in examining the impact of food prices on food consumption and subsequent health consequences. Fiscal policies targeting the relative price of unhealthy foods are frequently put forward as ways to address the obesity epidemic. Conversely, various food subsidy interventions are used in attempts to reduce levels of under-nutrition. Information on price elasticities is essential for understanding how such changes in food prices affect food consumption. It is crucial to know not only own-price elasticities but also cross-price elasticities, as food substitution patterns may have significant implications for policy recommendations. While own-price elasticities are common in analyses of the impact of food price changes on health, cross-price effects, even though generally acknowledged, are much less frequently included in analyses, especially in the public health literature. This article systematically reviews the global evidence on cross-price elasticities and provides combined estimates for seven food groups in low-income, middle-income and high-income countries alongside previously estimated own-price elasticities. Changes in food prices had the largest own-price effects in low-income countries. Cross-price effects were more varied and depending on country income level were found to be reinforcing, undermining or alleviating own-price effects. Copyright © 2014 John Wiley & Sons, Ltd.

Circulation Price Elasticity in the Daily Newspaper Industry.

Science.gov (United States)

Grotta, Gerald L.; Taylor, Michael Lee

Pricing of subscriptions and single copies has historically been arbitrary. Evidence indicates that the newspaper industry has tended to overestimate the elasticity of demand for newspaper circulation. This study analyzed price changes, circulation changes, and population changes for all daily newspapers in the United States between 1970 and 1975.…

Estimation of Iranian price elasticities of residential electricity demand

Directory of Open Access Journals (Sweden)

Yeganeh Mousavi Jahromi

2014-06-01

Full Text Available This paper presents a study to determine demand for electricity in city of Yazd, Iran over the period of 1998-2008. Using vector error correction model (VECM based on seasonal information, the study determines that electricity has no elasticity in short term in household expenditure. Therefore, government policy on increasing price of electricity will not influence demand. However, electricity maintains elasticity over the long-term period and an increase on price of electricity could motivate consumers to reduce their consumption by purchasing energy efficient facilities. Therefore, any governmental strategy to increase price may have positive impact on economy. The study also detects a positive and meaningful relationship between temperature and electricity consumption.

Optimal Electricity Charge Strategy Based on Price Elasticity of Demand for Users

Science.gov (United States)

Li, Xin; Xu, Daidai; Zang, Chuanzhi

The price elasticity is very important for the prediction of electricity demand. This paper mainly establishes the price elasticity coefficient for electricity in single period and inter-temporal. Then, a charging strategy is established based on these coefficients. To evaluate the strategy proposed, simulations of the two elastic coefficients are carried out based on the history data of a certain region.

Price elasticity of tobacco products among economic classes in India, 2011-2012.

Science.gov (United States)

Selvaraj, Sakthivel; Srivastava, Swati; Karan, Anup

2015-12-09

The objectives of this study are to: (1) examine the pattern of price elasticity of three major tobacco products (bidi, cigarette and leaf tobacco) by economic groups of population based on household monthly per capita consumption expenditure in India and (2) assess the effect of tax increases on tobacco consumption and revenue across expenditure groups. Data from the 2011-2012 nationally representative Consumer Expenditure Survey from 101,662 Indian households were used. Households which consumed any tobacco or alcohol product were retained in final models. The study draws theoretical frameworks from a model using the augmented utility function of consumer behaviour, with a two-stage two-equation system of unit values and budget shares. Primary outcome measures were price elasticity of demand for different tobacco products for three hierarchical economic groups of population and change in tax revenue due to changes in tax structure. We finally estimated price elasticity of demand for bidi, cigarette and leaf tobacco and effects of changes in their tax rates on demand for these tobacco products and tax revenue. Own price elasticities for bidi were highest in the poorest group (-0.4328) and lowest in the richest group (-0.0815). Cigarette own price elasticities were -0.832 in the poorest group and -0.2645 in the richest group. Leaf tobacco elasticities were highest in the poorest (-0.557) and middle (-0.4537) groups. Poorer group elasticities were the highest, indicating that poorer consumers are more price responsive. Elasticity estimates show positive distributional effects of uniform bidi and cigarette taxation on the poorest consumers, as their consumption is affected the most due to increases in taxation. Leaf tobacco also displayed moderate elasticities in poor and middle tertiles, suggesting that tax increases may result in a trade-off between consumption decline and revenue generation. A broad spectrum rise in tax rates across all products is critical for

Understanding Price Elasticities to Inform Public Health Research and Intervention Studies: Key Issues

Science.gov (United States)

Nghiem, Nhung; Genç, Murat; Blakely, Tony

2013-01-01

Pricing policies such as taxes and subsidies are important tools in preventing and controlling a range of threats to public health. This is particularly so in tobacco and alcohol control efforts and efforts to change dietary patterns and physical activity levels as a means of addressing increases in noncommunicable diseases. To understand the potential impact of pricing policies, it is critical to understand the nature of price elasticities for consumer products. For example, price elasticities are key parameters in models of any food tax or subsidy that aims to quantify health impacts and cost-effectiveness. We detail relevant terms and discuss key issues surrounding price elasticities to inform public health research and intervention studies. PMID:24028228

Understanding price elasticities to inform public health research and intervention studies: key issues.

Science.gov (United States)

Nghiem, Nhung; Wilson, Nick; Genç, Murat; Blakely, Tony

2013-11-01

Pricing policies such as taxes and subsidies are important tools in preventing and controlling a range of threats to public health. This is particularly so in tobacco and alcohol control efforts and efforts to change dietary patterns and physical activity levels as a means of addressing increases in noncommunicable diseases. To understand the potential impact of pricing policies, it is critical to understand the nature of price elasticities for consumer products. For example, price elasticities are key parameters in models of any food tax or subsidy that aims to quantify health impacts and cost-effectiveness. We detail relevant terms and discuss key issues surrounding price elasticities to inform public health research and intervention studies.

ELASTICITY OF CORN PRICE TRANSMISION AND ITS IMPLICATION TO FARMERS

Directory of Open Access Journals (Sweden)

Ahmad Muslim

2011-09-01

Full Text Available Corn has important roles to Indonesian economy both for staple foods and for price transmission to other products. The high domestic demand for corn compared to its domestic production has made corn imports continue to grow. This research is aimed to know the elasticity of price transmission and its implication to corn’s farmers. The results of analysis show that corn price transmission is inelastic. The coefficient shows that corn market is oligopsony under the imperfect competition market. To help the corn farmers, the government has to provide fertilizer subsidy and farm credit with low interest rates, as well as impose import tariff on corn. Keywords: Corn, Elasticity of price transmission, oligopsony, imperfect competition marketJEL classification numbers: Q00, Q12, Q18

The price elasticity of demand for heroin: Matched longitudinal and experimental evidence.

Science.gov (United States)

Olmstead, Todd A; Alessi, Sheila M; Kline, Brendan; Pacula, Rosalie Liccardo; Petry, Nancy M

2015-05-01

This paper reports estimates of the price elasticity of demand for heroin based on a newly constructed dataset. The dataset has two matched components concerning the same sample of regular heroin users: longitudinal information about real-world heroin demand (actual price and actual quantity at daily intervals for each heroin user in the sample) and experimental information about laboratory heroin demand (elicited by presenting the same heroin users with scenarios in a laboratory setting). Two empirical strategies are used to estimate the price elasticity of demand for heroin. The first strategy exploits the idiosyncratic variation in the price experienced by a heroin user over time that occurs in markets for illegal drugs. The second strategy exploits the experimentally induced variation in price experienced by a heroin user across experimental scenarios. Both empirical strategies result in the estimate that the conditional price elasticity of demand for heroin is approximately -0.80. Copyright © 2015 Elsevier B.V. All rights reserved.

The price elasticity of demand for heroin: matched longitudinal and experimental evidence#

Science.gov (United States)

Olmstead, Todd A.; Alessi, Sheila M.; Kline, Brendan; Pacula, Rosalie Liccardo; Petry, Nancy M.

2015-01-01

This paper reports estimates of the price elasticity of demand for heroin based on a newly constructed dataset. The dataset has two matched components concerning the same sample of regular heroin users: longitudinal information about real-world heroin demand (actual price and actual quantity at daily intervals for each heroin user in the sample) and experimental information about laboratory heroin demand (elicited by presenting the same heroin users with scenarios in a laboratory setting). Two empirical strategies are used to estimate the price elasticity of demand for heroin. The first strategy exploits the idiosyncratic variation in the price experienced by a heroin user over time that occurs in markets for illegal drugs. The second strategy exploits the experimentally-induced variation in price experienced by a heroin user across experimental scenarios. Both empirical strategies result in the estimate that the conditional price elasticity of demand for heroin is approximately −0.80. PMID:25702687

A meta-analysis of the price elasticity of gasoline demand. A SUR approach

Energy Technology Data Exchange (ETDEWEB)

Brons, Martijn; Rietveld, Piet [Department of Spatial Economics, Vrije Universiteit, De Boelelaan 1105, 1081 HV Amsterdam (Netherlands); Tinbergen Institute Amsterdam (TIA), Roetersstraat 31, 1018 WB Amsterdam (Netherlands); Nijkamp, Peter [Department of Spatial Economics, Vrije Universiteit, De Boelelaan 1105, 1081 HV Amsterdam (Netherlands); Tinbergen Institute Amsterdam (TIA), Roetersstraat 31, 1018 WB Amsterdam (Netherlands); The Netherlands Organisation of Scientific Research (NWO), postbus 93138 - 2509 AC Den Haag (Netherlands); Pels, Eric [Department of Spatial Economics, Vrije Universiteit, De Boelelaan 1105, 1081 HV Amsterdam (Netherlands)

2008-09-15

Automobile gasoline demand can be expressed as a multiplicative function of fuel efficiency, mileage per car and car ownership. This implies a linear relationship between the price elasticity of total fuel demand and the price elasticities of fuel efficiency, mileage per car and car ownership. In this meta-analytical study we aim to investigate and explain the variation in empirical estimates of the price elasticity of gasoline demand. A methodological novelty is that we use the linear relationship between the elasticities to develop a meta-analytical estimation approach based on a Seemingly Unrelated Regression (SUR) model with Cross Equation Restrictions. This approach enables us to combine observations of different elasticities and thus increase our sample size. Furthermore, it allows for a more detailed interpretation of our meta-regression results. The empirical results of the study demonstrate that the SUR approach leads to more precise results (i.e., lower standard errors) than a standard meta-analytical approach. We find that, with mean short run and long run price elasticities of - 0.34 and - 0.84, respectively, the demand for gasoline is not very price sensitive. Both in the short and the long run, the impact of a change in the gasoline price on demand is mainly driven by responses in fuel efficiency and mileage per car and to a slightly lesser degree by changes in car ownership. Furthermore, we find that study characteristics relating to the geographic area studied, the year of the study, the type of data used, the time horizon and the functional specification of the demand equation have a significant impact on the estimated value of the price elasticity of gasoline demand. (author)

A meta-analysis of the price elasticity of gasoline demand. A SUR approach

International Nuclear Information System (INIS)

Brons, Martijn; Rietveld, Piet; Nijkamp, Peter; Pels, Eric

2008-01-01

Automobile gasoline demand can be expressed as a multiplicative function of fuel efficiency, mileage per car and car ownership. This implies a linear relationship between the price elasticity of total fuel demand and the price elasticities of fuel efficiency, mileage per car and car ownership. In this meta-analytical study we aim to investigate and explain the variation in empirical estimates of the price elasticity of gasoline demand. A methodological novelty is that we use the linear relationship between the elasticities to develop a meta-analytical estimation approach based on a Seemingly Unrelated Regression (SUR) model with Cross Equation Restrictions. This approach enables us to combine observations of different elasticities and thus increase our sample size. Furthermore, it allows for a more detailed interpretation of our meta-regression results. The empirical results of the study demonstrate that the SUR approach leads to more precise results (i.e., lower standard errors) than a standard meta-analytical approach. We find that, with mean short run and long run price elasticities of - 0.34 and - 0.84, respectively, the demand for gasoline is not very price sensitive. Both in the short and the long run, the impact of a change in the gasoline price on demand is mainly driven by responses in fuel efficiency and mileage per car and to a slightly lesser degree by changes in car ownership. Furthermore, we find that study characteristics relating to the geographic area studied, the year of the study, the type of data used, the time horizon and the functional specification of the demand equation have a significant impact on the estimated value of the price elasticity of gasoline demand. (author)

Grower demand for sensor-controlled irrigation

Science.gov (United States)

Lichtenberg, Erik; Majsztrik, John; Saavoss, Monica

2015-01-01

Water scarcity is likely to increase in the coming years, making improvements in irrigation efficiency increasingly important. An emerging technology that promises to increase irrigation efficiency substantially is a wireless irrigation sensor network that uploads sensor data into irrigation management software, creating an integrated system that allows real-time monitoring and control of moisture status that has been shown in experimental settings to reduce irrigation costs, lower plant loss rates, shorten production times, decrease pesticide application, and increase yield, quality, and profit. We use an original survey to investigate likely initial acceptance, ceiling adoption rates, and profitability of this new sensor network technology in the nursery and greenhouse industry. We find that adoption rates for a base system and demand for expansion components are decreasing in price, as expected. The price elasticity of the probability of adoption suggests that sensor networks are likely to diffuse at a rate somewhat greater than that of drip irrigation. Adoption rates for a base system and demand for expansion components are increasing in specialization in ornamental production: growers earning greater shares of revenue from greenhouse and nursery operations are willing to pay more for a base system and are willing to purchase larger numbers of expansion components at any given price. We estimate that growers who are willing to purchase a sensor network expect investment in this technology to generate significant profit, consistent with findings from experimental studies.

Child Safety Seats on Commercial Airliners: A Demonstration of Cross-Price Elasticities

Science.gov (United States)

Sanders, Shane; Weisman, Dennis L.; Li, Dong; Grimes, Paul, Ed.

2008-01-01

The cross-price elasticity concept can be difficult for microeconomics students to grasp. The authors provide a real-life application of cross-price elasticities in policymaking. After a debate that spanned more than a decade and included input from safety engineers, medical personnel, politicians, and economists, the Federal Aviation…

[Price elasticity of demand for cigarettes and alcohol in Ecuador, based on household data].

Science.gov (United States)

Chávez, Ricardo

2016-10-01

Estimate price elasticity of demand for cigarettes and alcohol in Ecuador using cross-sectional data from the National Survey of Urban and Rural Household Income and Expenditures (ENIGHUR is the acronym in Spanish) 2011-2012. ENIGHUR 2011-2012 data were used with Deaton's (1, 2) methodology to estimate price elasticity of demand for cigarettes and alcohol with expenditure and quantity information. Household socioeconomic variables were also included. Price elasticity of demand for cigarettes is -0.87, meaning that a 10% price increase could lead to an 8.7% decrease in consumption. Results for cross-price elasticities of alcohol on cigarette demand are negative, as expected, indicating that they are complementary goods; however, the results are not statistically significant. Furthermore, it was found that price elasticity of demand for alcohol is -0.44, meaning that a 10% increase in the price of alcohol would produce a 4.4% decrease in consumption. A policy of price increases, for example, with a tax increase, applied to both cigarettes and alcohol, could have a positive effect on public health through reductions in consumption of both goods. However, this measure would not be sufficient to bridge gaps in prevalence measures and health outcomes between sex and other population groups, given the observed difference in the sensitivity of consumption to price variations.

Meta-Analysis of the Oil Price Elasticity of the GDP for Policy Analysis: Documentation

Energy Technology Data Exchange (ETDEWEB)

Leiby, Paul Newsome [Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States); Bowman, David Charles [Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States); Oladosu, Gbadebo A. [Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States); Uria Martinez, Rocio [Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States); Johnson, Megan M. [Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)

2017-08-01

Given the important role of oil in economic activities, policy makers are interested in estimates of the potential damage to the economy from oil price shocks, particularly during periods of rapid and large increases that accompany severe shocks. Such estimates are needed to quantify the economic costs of oil price shocks, and to evaluate the potential benefits of alternative policy responses. Although research on the economic impacts of oil price shocks is extensive and has generally found that large increases in oil prices exert negative economic impacts, the range of estimates, summarized by the oil price elasticity of the GDP or other aggregate measure of economic activity, is very wide. There are also conditions under which the relationship between the oil price and the economy could be positive. The range of estimates of the oil price elasticity of the GDP for the United States is typified by averages from the studies of Hamilton (2005, 2012) and Kilian and Vigfusson (2014), in which the implied elasticities were -0.014 to - 0.069 and +0.004 to -0.052, respectively. We employ a meta-regression approach to systematically summarize available estimates of the oil price elasticity of the GDP for oil importing economies, and examine the role of key factors. The resulting regression model was used to estimate the oil price elasticity of the GDP for the United States. Based on this we estimate the mean elasticity for the United States at -0.0238, with a 68% confidence interval of -0.0075 to -0.0402, four quarters after a shock.

Alcohol price elasticities in control and license states in the United States, 1982-99.

Science.gov (United States)

Trolldal, Björn; Ponicki, William

2005-08-01

The demand for alcohol has been demonstrated repeatedly to be sensitive to price changes. However, estimated price elasticities vary by study region and over time. One explanation for these variations might be that different countries or parts of countries have had different alcohol control systems. The hypothesis addressed in this study was that a regulated market leads to higher transaction costs associated with purchasing alcohol, which in turn increases the full price of the beverages (the nominal cash price plus transaction costs). As a result, the cash price of alcohol represents a smaller part of the full price in a highly regulated market. Assuming that customers respond primarily to changes in full price, the demand for alcohol should be less sensitive to changes in cash price where regulation is stricter. This study examined whether variations in price elasticities were a function of the different regulatory systems in control and license states in the United States during the period 1982-99. Time-series cross-sectional analyses (in 50 states over 18 years) were conducted. Elasticities were estimated using a multiplicative model based upon first-differences of time-series within states. Disposable income and other socio-demographic variables were used as control variables. All data were obtained from archival sources. The demand for spirits and beer were significantly more sensitive to price changes in license states than in control states. The estimated price elasticity for wine sales was also somewhat larger in license states, but not significantly so. The lower price elasticities for spirits and beer in the control states support the hypothesis that customers respond primarily to changes in the full price of alcohol.

Price elasticity of tobacco products among economic classes in India, 2011–2012

Science.gov (United States)

Selvaraj, Sakthivel; Srivastava, Swati; Karan, Anup

2015-01-01

Objectives The objectives of this study are to: (1) examine the pattern of price elasticity of three major tobacco products (bidi, cigarette and leaf tobacco) by economic groups of population based on household monthly per capita consumption expenditure in India and (2) assess the effect of tax increases on tobacco consumption and revenue across expenditure groups. Setting Data from the 2011–2012 nationally representative Consumer Expenditure Survey from 101 662 Indian households were used. Participants Households which consumed any tobacco or alcohol product were retained in final models. Primary outcome measures The study draws theoretical frameworks from a model using the augmented utility function of consumer behaviour, with a two-stage two-equation system of unit values and budget shares. Primary outcome measures were price elasticity of demand for different tobacco products for three hierarchical economic groups of population and change in tax revenue due to changes in tax structure. We finally estimated price elasticity of demand for bidi, cigarette and leaf tobacco and effects of changes in their tax rates on demand for these tobacco products and tax revenue. Results Own price elasticities for bidi were highest in the poorest group (−0.4328) and lowest in the richest group (−0.0815). Cigarette own price elasticities were −0.832 in the poorest group and −0.2645 in the richest group. Leaf tobacco elasticities were highest in the poorest (−0.557) and middle (−0.4537) groups. Conclusions Poorer group elasticities were the highest, indicating that poorer consumers are more price responsive. Elasticity estimates show positive distributional effects of uniform bidi and cigarette taxation on the poorest consumers, as their consumption is affected the most due to increases in taxation. Leaf tobacco also displayed moderate elasticities in poor and middle tertiles, suggesting that tax increases may result in a trade-off between consumption decline and

What U.S. data should be used to measure the price elasticity of demand for alcohol?

Science.gov (United States)

Ruhm, Christopher J; Jones, Alison Snow; McGeary, Kerry Anne; Kerr, William C; Terza, Joseph V; Greenfield, Thomas K; Pandian, Ravi S

2012-12-01

This paper examines how estimates of the price elasticity of demand for beer vary with the choice of alcohol price series examined. Our most important finding is that the commonly used ACCRA price data are unlikely to reliably indicate alcohol demand elasticities-estimates obtained from this source vary drastically and unpredictably. As an alternative, researchers often use beer taxes to proxy for alcohol prices. While the estimated beer taxes elasticities are more stable, there are several problems with using taxes, including difficulties in accounting for cross-price effects. We believe that the most useful estimates reported in this paper are obtained using annual Uniform Product Code (UPC) "barcode" scanner data on grocery store alcohol prices. These estimates suggest relatively low demand elasticity, probably around -0.3, with evidence that the elasticities are considerably overstated in models that control for beer but not wine or spirits prices. Copyright © 2012 Elsevier B.V. All rights reserved.

Anticipation, Tax Avoidance, and the Price Elasticity of Gasoline Demand

OpenAIRE

Coglianese, John; Davis, Lucas W; Kilian, Lutz; Stock, James H

2015-01-01

Traditional least squares estimates of the responsiveness of gasoline consumption to changes in gasoline prices are biased toward zero, given the endogeneity of gasoline prices. A seemingly natural solution to this problem is to instrument for gasoline prices using gasoline taxes, but this approach tends to yield implausibly large price elasticities. We demonstrate that anticipatory behavior provides an important explanation for this result. We provide evidence that gasoline buyers increase g...

A Note on R&D and Price Elasticity of Demand

DEFF Research Database (Denmark)

Schröder, Philipp J.H.; Schumacher, Dieter; Lucke, Dorothea

2005-01-01

This note explores the relationship between the price elasticity of demand and the R&D intensity of the product. We introduce the concept of R&D intensity into a standard Dixit-Stiglitz/Krugman-type setting. R&D activity is treated as a fixed cost of production. Within this framework, sectors...... with a higher R&D intensity show a lower price elasticity of demand. This proposition is confirmed by an empirical investigation of export demand for manufactured goods from major industrialised countries. Consequently, real exchange rate changes have an impact on the commodity structure of exports....

A meta-analysis of the price elasticity of gasoline demand. A SUR approach

NARCIS (Netherlands)

Brons, M.R.E.; Nijkamp, P.; Pels, E.; Rietveld, P.

2008-01-01

Automobile gasoline demand can be expressed as a multiplicative function of fuel efficiency, mileage per car and car ownership. This implies a linear relationship between the price elasticity of total fuel demand and the price elasticities of fuel efficiency, mileage per car and car ownership. In

Estimating price elasticities when there is smuggling: the sensitivity of smoking to price in Canada.

Science.gov (United States)

Gruber, Jonathan; Sen, Anindya; Stabile, Mark

2003-09-01

A central parameter for evaluating tax policies is the price elasticity of demand for cigarettes. But in many countries this parameter is difficult to estimate reliably due to widespread smuggling, which significantly biases estimates using legal sales data. An excellent example is Canada, where widespread smuggling in the early 1990s, in response to large tax increases, biases upwards the response of legal cigarette sales to price. We surmount this problem through two approaches: excluding the provinces and years where smuggling was greatest; and using household level expenditure data on smoking. These two approaches yield a tightly estimated elasticity in the range of -0.45 to -0.47. We also show that the sensitivity of smoking to price is much larger among lower income Canadians. In the context of recent behavioral models of smoking, whereby higher taxes reduce unwanted smoking among price sensitive populations, this finding suggests that cigarette taxes may not be as regressive as previously suggested. Finally, we show that price increases on cigarettes do not increase, and may actually decrease, consumption of alcohol; as a result, smuggling of cigarettes may have raised consumption of alcohol as well.

What U.S. Data Should be Used to Measure the Price Elasticity of Demand for Alcohol?*

Science.gov (United States)

Ruhm, Christopher J.; Jones, Alison Snow; McGeary, Kerry Anne; Kerr, William C.; Terza, Joseph V.; Greenfield, Thomas K.; Pandian, Ravi S.

2012-01-01

This paper examines how estimates of the price elasticity of demand for beer vary with the choice of alcohol price series examined. Our most important finding is that the commonly used ACCRA price data are unlikely to reliably indicate alcohol demand elasticities—estimates obtained from this source vary drastically and unpredictably. As an alternative, researchers often use beer taxes to proxy for alcohol prices. While the estimated beer taxes elasticities are more stable, there are several problems with using taxes, including difficulties in accounting for cross-price effects. We believe that the most useful estimates reported in this paper are obtained using annual Uniform Product Code (UPC) “barcode” scanner data on grocery store alcohol prices. These estimates suggest relatively low demand elasticity, probably around −0.3, with evidence that the elasticities are considerably overstated in models that control for beer but not wine or spirits prices. PMID:23022631

Estimating the price elasticity for demand for electricity by sector in South Africa

Directory of Open Access Journals (Sweden)

Roula Inglesi-Lotz

2011-12-01

Full Text Available This paper analyses electricity consumption patterns in South Africa in an attempt to understand and identify the roots of the current electricity crisis. This is done by investigating various economic sectors’ responses to price changes using panel data for the period 1993–2004. Positive and statistically significant price elasticities over this period were found for the transport (rail and commercial sectors while there are positive, but small and statistically insignificant responses to price changes in the agriculture and mining sectors. Only the industrial sector responded to changes in electricity prices according to theory, namely illustrating negative demand elasticities. This sector, however, dominates electricity consumption resulting in aggregate demand elasticities that are negative. These results explain, in part, the current electricity crisis. Given the historic low level of electricity prices in conjunction with, on the whole, a real price decline, i.e. price increases lower than the inflation rate; there was no major incentive to reduce electricity consumption and/or to be efficient. This result supports the notion that prices do have an important signalling effect in the economy. Hence, the electricity prices should be considered not only from an economic growth or social vantage point, but also from a supply and technocratic perspective, which includes environmental factors such as CO2-emissions. Prices should not be determined without considering the system-wide implications thereof.

Price elasticity estimation of electricity demand in France

International Nuclear Information System (INIS)

Bourbonnais, Regis; Keppler, Jan Horst

2013-10-01

On request of the French Union of Electricity (UFE), the authors have carried out a series of econometric statistical tests in order to determine the price elasticity of electricity demand in France. The results obtained are all solid and realistic

Estimating the price elasticity of expenditure for prescription drugs in the presence of non-linear price schedules: an illustration from Quebec, Canada.

Science.gov (United States)

Contoyannis, Paul; Hurley, Jeremiah; Grootendorst, Paul; Jeon, Sung-Hee; Tamblyn, Robyn

2005-09-01

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. (c) 2005 John Wiley & Sons, Ltd.

Modeling of demand response in electricity markets : effects of price elasticity

International Nuclear Information System (INIS)

Banda, E.C.; Tuan, L.A.

2007-01-01

A design mechanism for the optimal participation of customer load in electricity markets was presented. In particular, this paper presented a modified market model for the optimal procurement of interruptible loads participating in day-ahead electricity markets. The proposed model considers the effect of price elasticity and demand-response functions. The objective was to determine the role that price elasticity plays in electricity markets. The simulation model can help the Independent System Operator (ISO) identify customers offering the lowest price of interruptible loads and load flow patterns that avoid problems associated with transmission congestion and transmission losses. Various issues associated with procurement of demand-response offerings such as advance notification, locational aspect of load, and power factor of the loads, were considered. It was shown that demand response can mitigate price volatility by allowing the ISO to maintain operating reserves during peak load periods. It was noted that the potential benefits of the demand response program would be reduced when price elasticity of demand is taken into account. This would most likely occur in actual developed open electricity markets, such as Nordpool. This study was based on the CIGRE 32-bus system, which represents the Swedish high voltage power system. It was modified for this study to include a broad range of customer characteristics. 18 refs., 2 tabs., 14 figs

Price elasticity matrix of demand in power system considering demand response programs

Science.gov (United States)

Qu, Xinyao; Hui, Hongxun; Yang, Shengchun; Li, Yaping; Ding, Yi

2018-02-01

The increasing renewable energy power generations have brought more intermittency and volatility to the electric power system. Demand-side resources can improve the consumption of renewable energy by demand response (DR), which becomes one of the important means to improve the reliability of power system. In price-based DR, the sensitivity analysis of customer’s power demand to the changing electricity prices is pivotal for setting reasonable prices and forecasting loads of power system. This paper studies the price elasticity matrix of demand (PEMD). An improved PEMD model is proposed based on elasticity effect weight, which can unify the rigid loads and flexible loads. Moreover, the structure of PEMD, which is decided by price policies and load types, and the calculation method of PEMD are also proposed. Several cases are studied to prove the effectiveness of this method.

Price elasticities of alcohol demand: evidence from Russia.

Science.gov (United States)

Goryakin, Yevgeniy; Roberts, Bayard; McKee, Martin

2015-03-01

In this paper, we estimate price elasticities of demand of several types of alcoholic drinks, using 14 rounds of data from the Russia Longitudinal Monitoring Survey-HSE, collected from 1994 until 2009. We deal with potential confounding problems by taking advantage of a large number of control variables, as well as by estimating community fixed effect models. All in all, although alcohol prices do appear to influence consumption behaviour in Russia, in most cases the size of effect is modest. The finding that two particularly problematic drinks-cheap vodka and fortified wine-are substitute goods also suggests that increasing their prices may not lead to smaller alcohol consumption. Therefore, any alcohol pricing policies in Russia must be supplemented with other measures, such as restrictions on numbers of sales outlets or their opening times.

Price elasticity of demand for psychiatric consultation in a Nigerian ...

African Journals Online (AJOL)

Objective: This paper addresses price elasticity of demand (PED) in a region where most patients make payments for consultations out of pocket. PED is a measure of the responsiveness of the quantity demanded of goods or services to changes in price. The study was done in the context of an outpatient psychiatric clinic in ...

Price elasticity of demand of non-cigarette tobacco products: a systematic review and meta-analysis.

Science.gov (United States)

Jawad, Mohammed; Lee, John Tayu; Glantz, Stanton; Millett, Christopher

2018-01-23

To systematically review the price elasticity of demand of non-cigarette tobacco products. Medline, Embase, EconLit and the Web of Science without language or time restrictions. Two reviewers screened title and abstracts, then full texts, independently and in duplicate. We based eligibility criteria on study design (interventional or observational), population (individuals or communities without geographic restrictions), intervention (price change) and outcome (change in demand). We abstracted data on study features, outcome measures, statistical approach, and single best own- and cross-price elasticity estimates with respect to cigarettes. We conducted a random effects meta-analysis for estimates of similar product, outcome and country income level. For other studies we reported median elasticities by product and country income level. We analysed 36 studies from 15 countries yielding 125 elasticity estimates. A 10% price increase would reduce demand by: 8.3% for cigars (95% CI 2.9 to 13.8), 6.4% for roll your owns (95% CI 4.3 to 8.4), 5.7% for bidis (95% CI 4.3 to 7.1) and 2.1% for smokeless tobacco (95% CI -0.6 to 4.8). Median price elasticities for all ten products were also negative. Results from few studies that examined cross-price elasticity suggested a positive substitution effect between cigarette and non-cigarette tobacco products. There is sufficient evidence in support of the effectiveness of price increases to reduce consumption of non-cigarette tobacco products as it is for cigarettes. Positive substitutability between cigarette and non-cigarette tobacco products suggest that tax and price increases need to be simultaneous and comparable across all tobacco products. © Article author(s) (or their employer(s) unless otherwise stated in the text of the article) 2018. All rights reserved. No commercial use is permitted unless otherwise expressly granted.

Political Economy and Irrigation Technology Adoption Implications of Water Pricing under Asymmetric Information

OpenAIRE

Dridi, Chokri; Khanna, Madhu

2005-01-01

We analyze the design of water pricing rules emerging from farmers' lobbying and their implications for the size of the lobby, water use, profits and social welfare. The lobbying groups are the adopters of modern irrigation technology and the non-adopters. The pricing rules are designed to meet budget balance of water provision; we considered (i) a two-part tariff composed of a mandatory per-acre fee plus a volumetric charge and (ii) a nonlinear pricing schedule. Our results show that under e...

Does subsidy work? Price elasticity of demand for influenza vaccination among the elderly in Japan.

Science.gov (United States)

Kondo, Masahide; Hoshi, Shu-ling; Okubo, Ichiro

2009-08-01

Subsidy for influenza vaccination is often provided to the elderly in order to encourage them to receive a flu shot in developed countries. However, its effect on uptake rate, i.e., price elasticity of demand, has not been well studied. Japan's decentralised vaccination programme allows observation of various pairs in price and uptake rate of flu shots among the elderly by the municipality from 2001/2002 to 2004/2005 season. We combine our sample survey data (n=281), which monitor price, subsidy and uptake rate, with published data on local characteristics in order to estimate price elasticity of demand with panel model. We find price elasticity of demand for influenza vaccine: nearly zero in nationwide, nearly zero in urban area, and -1.07 in rural area. The results question the rationale for subsidy, especially in urban area. There are cases where maintaining or increasing the level of subsidy is not an efficient allocation of finite health care resources. When organising a vaccination programme, health manager should be careful about the balance between subsidy and other efforts in order to encourage the elderly to receive shots with price elasticity in mind.

A theoretical analysis of price elasticity of energy demand in multistage energy conversion systems

International Nuclear Information System (INIS)

Lowe, R.

2003-01-01

The objective of this paper is an analytical exploration of the problem of price elasticity of energy demand in multi-stage energy conversion systems. The paper describes in some detail an analytical model of energy demand in such systems. Under a clearly stated set of assumptions, the model makes it possible to explore both the impacts of the number of sub-systems, and of varying sub-system elasticities on overall system elasticity. The analysis suggests that overall price elasticity of energy demand for such systems will tend asymptotically to unity as the number of sub-systems increases. (author)

A comprehensive examination of own- and cross-price elasticities of tobacco and nicotine replacement products in the U.S.

Science.gov (United States)

Huang, Jidong; Gwarnicki, Cezary; Xu, Xin; Caraballo, Ralph S; Wada, Roy; Chaloupka, Frank J

2018-04-21

While much is known about the demand for cigarettes, research on the demand for non-cigarette tobacco products and the cross-price impacts among those products is limited. This study aims to comprehensively examine the own- and cross-price elasticities of demand for tobacco and nicotine replacement products (NRPs) in the U.S. We analyzed market-level quarterly data on sales and prices of 15 different types of tobacco products and NRPs from 2007 to 2014, compiled from retail store scanner data. Fixed effects models with controls were used to estimate their own-price elasticities and cross-price elasticities between cigarettes and the other 14 products. Our results show that, except for cigars, the demand for combustible tobacco products was generally elastic, with the estimated own-price elasticity >1 (10% increase in prices reduces sales by >10%). The own-price elasticities for smokeless tobacco products were smaller than those for combustible tobacco, although not always significant. The demand for electronic cigarettes and NRPs was found to be elastic. The cross-price elasticities with respect to cigarettes were positive for cigarillos, little cigars, loose tobacco, pipe tobacco, electronic cigarettes and NRPs, but only results for little cigars, loose tobacco, pipe tobacco, and dissolvable lozenges were consistently significant. Our findings suggest demand for tobacco products and NRPs was responsive to changes in their own prices. Substitutions or positive cross-price impacts between cigarettes and certain other products exist. It is important that tobacco control policies take into account both own- and cross-price impacts among tobacco products and NRTs. Copyright © 2018 Elsevier Inc. All rights reserved.

The evolution of price elasticity of electricity demand in South Africa: A Kalman filter application

International Nuclear Information System (INIS)

Inglesi-Lotz, R.

2011-01-01

In South Africa, the electricity mismatch of supply and demand has been of major concern. Additional to past problems, the 2008 electricity crisis made the solution crucial after its damaging consequences to the economy. The disagreement on the need and consequences of the continuous electricity price hikes worsens the situation. To contribute to the recent electricity debate, this paper proposes a time-varying price elasticity of demand for electricity; the sensitivity of electricity consumption to price fluctuations changes throughout the years. The main purpose of this study is the estimation of the price elasticity of electricity in South Africa during the period 1980-2005 by employing an advanced econometric technique, the Kalman filter. Apart from the decreasing effect of electricity prices to consumption (-71.8% in the 1990s and -94.5% in the 2000s in average), our results conclude to an important finding: the higher the prices (for example in the 1980s) the higher the sensitivity of consumers to price fluctuations. Thus, further increases of the electricity prices may lead to changes in the behaviour of electricity consumers, focusing their efforts on improving their efficiency levels by introducing demand-side management techniques or even turning to other sources of - cheaper - energy. - Highlights: → The price elasticity of South Africa's electricity demand (1980-2005) is examined. → The Kalman filter methodology is used to show elasticity changes over time. → Decreasing effect of electricity prices to consumption over the years is found. → The higher the prices of electricity were, the higher the sensitivity of consumption. → If electricity prices increase, consumers will choose to consume more efficiently.

The evolution of price elasticity of electricity demand in South Africa: A Kalman filter application

Energy Technology Data Exchange (ETDEWEB)

Inglesi-Lotz, R., E-mail: roula.inglesi@up.ac.za [Department of Economics, EMS Building, University of Pretoria, Gauteng 0002 (South Africa)

2011-06-15

In South Africa, the electricity mismatch of supply and demand has been of major concern. Additional to past problems, the 2008 electricity crisis made the solution crucial after its damaging consequences to the economy. The disagreement on the need and consequences of the continuous electricity price hikes worsens the situation. To contribute to the recent electricity debate, this paper proposes a time-varying price elasticity of demand for electricity; the sensitivity of electricity consumption to price fluctuations changes throughout the years. The main purpose of this study is the estimation of the price elasticity of electricity in South Africa during the period 1980-2005 by employing an advanced econometric technique, the Kalman filter. Apart from the decreasing effect of electricity prices to consumption (-71.8% in the 1990s and -94.5% in the 2000s in average), our results conclude to an important finding: the higher the prices (for example in the 1980s) the higher the sensitivity of consumers to price fluctuations. Thus, further increases of the electricity prices may lead to changes in the behaviour of electricity consumers, focusing their efforts on improving their efficiency levels by introducing demand-side management techniques or even turning to other sources of - cheaper - energy. - Highlights: > The price elasticity of South Africa's electricity demand (1980-2005) is examined. > The Kalman filter methodology is used to show elasticity changes over time. > Decreasing effect of electricity prices to consumption over the years is found. > The higher the prices of electricity were, the higher the sensitivity of consumption. > If electricity prices increase, consumers will choose to consume more efficiently.

The analysis of indiference and the price elasticity of demand between different categories of agricultural products

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Vukadinović Predrag

2017-01-01

Full Text Available In this paper, the analysis of the price elasticity of demand of four different categories of agricultural products in the Republic of Serbia was described. Differentiating the price and demand of these products by sales points, and using the least squares approximation method, the elasticity for all different agricultural categories was expressed in the functional form. According to this, the coefficients of elasticity of the price and demand were computed and between different agricultural categories were analyzed. The results we obtained show that the market of agricultural products in Serbia is mostly inelastic because the coefficients of inelasticity and indifference of demand to change of prices, are dominant. The influence of factors on the elasticity of demand that are not of price character, proved to be very pronounced. The relationship of the two segments of agricultural market (markets and shops was also analysed and it was demonstrated that these two segments have a slight correlation.

A Meta-analysis of the Price Elasticity of Gasoline Demand. A System of Equations Approach

NARCIS (Netherlands)

Brons, Martijn; Nijkamp, Peter; Pels, Eric; Rietveld, Piet

2006-01-01

Automobile gasoline demand can be expressed as a multiplicative function of fuel efficiency, mileage per car and car ownership. This implies a linear relationship between the price elasticity of total fuel demand and the price elasticities of fuel efficiency, mileage per car and car ownership. In

Industrial and residential electricity demand dynamics in Japan: How did price and income elasticities evolve from 1989 to 2014?

International Nuclear Information System (INIS)

Wang, Nan; Mogi, Gento

2017-01-01

This study estimates the price and income elasticities of industrial and residential electricity demand in Japan with the annual data from 1989 to 2014. A time varying parameter (TVP) model with the Kalman filter is applied to monitor the evolution of consumer behaviors in the “post-bubble” period given the exogenous shock (financial crisis in 2008) and the structural breaks (electricity deregulation and Fukushima Daiichi crisis). The TVP model can provide a robust estimation of elasticities and can detect the outliers and the structural breaks. The results suggest that both industrial and residential consumers become less sensitive to price after the electricity deregulation and the financial crisis, and more sensitive to price after the Fukushima Daiichi crisis. Especially the industrial sector is less sensitive to price after the retail deregulation. By contrast, the income elasticities of industrial and residential sector consumers are stable during the examined period. Results also indicate that a negative relationship exists between the price elasticity of electricity demand and the price level of electricity after the electric sector deregulation. Some insights on the further electric sector reform and the environmental taxation in Japan are also provided. - Highlights: • A time varying parameter model is calculated with the Kalman filter. • Income elasticities are stable while price elasticities are time-varying. • Industrial sector is less sensitive to price change than residential sector. • Negative relationship between price elasticity and price level is found.

Price elasticity of demand for malt liquor beer: findings from a US pilot study.

Science.gov (United States)

French, Michael Thomas; Browntaylor, Didra; Bluthenthal, Ricky Neville

2006-05-01

Our objective is to estimate the relative price elasticity of demand for malt liquor beer (MLB), regular beer, hard liquor, and a combined group of all other alcoholic beverages. Three hundred and twenty-nine alcohol consumers (mostly male) in South-Central Los Angeles answered a series of questions pertaining to expected consumption responses to hypothetical price increases. We found that based on a 10% price increase, the mean price elasticity of demand (% change in quantity demanded / % change in price) was -0.79 for MLB drinkers, -1.14 for regular beer drinkers, -1.11 for hard liquor drinkers, and -1.69 for the combined group of all other drinkers. Logistic regression analysis revealed that the personal characteristics significantly related to being a MLB drinker were older age, not working, being homeless, and a daily drinker. Daily (or nearly daily) drinkers were more likely to be married, earning lower incomes, and hard liquor drinkers. This study is the first to investigate the price elasticity of demand for MLB drinkers and other heavy alcohol consumers in poor urban neighborhoods of the US. Future research can use the methods from this pilot study to more rigorously examine and compare the price sensitivity among heavy drinking groups.

Price and Income Elasticities of Russian Exports

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Bernardina Algieri

2004-12-01

Full Text Available The paper gauges export demand elasticities for Russia using an Error Correction technique within a cointegration framework. An extended version of the Imperfect Substitutes Model has been implemented to estimate the sensitivity of Russian exports without oil components to price and to Russian and world income. Our results suggest a robust and negative long run cointegration relationship between the real effective exchange rate, defined as the weighted average of the rouble’s exchange rates versus a basket of the three currencies with the largest share in the trade turnover adjusted to incorporate inflation rate differences (the ratio of the domestic price indices to the foreign price indices, and Russian exports. An increase in exports by 24% is caused by a real depreciation by 10%. Furthermore, a 10% growth in world income leads to a 33% rise in exports. Finally, exports drop by 14% whenever a 10% increase in domestic income occurs

A theoretical analysis of price elasticity of energy demand in multi-stage energy conversion systems

International Nuclear Information System (INIS)

Lowe, Robert

2003-01-01

The objective of this paper is an analytical exploration of the problem of price elasticity of energy demand in multi-stage energy conversion systems. The paper describes in some detail an analytical model of energy demand in such systems. Under a clearly stated set of assumptions, the model makes it possible to explore both the impacts of the number of sub-systems, and of varying sub-system elasticities on overall system elasticity. The analysis suggests that overall price elasticity of energy demand for such systems will tend asymptotically to unity as the number of sub-systems increases

Price and Income Elasticity of Australian Retail Finance: An Autoregressive Distributed Lag (ARDL Approach

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Helen Higgs

2014-03-01

Full Text Available This paper models the price and income elasticity of retail finance in Australia using aggregate quarterly data and an autoregressive distributed lag (ARDL approach. We particularly focus on the impact of the global financial crisis (GFC from 2007 onwards on retail finance demand and analyse four submarkets (period analysed in brackets: owneroccupied housing loans (Sep 1985–June 2010, term loans (for motor vehicles, household goods and debt consolidation, etc. (Dec 1988–Jun 2010, credit card loans (Mar 1990–Jun 2010, and margin loans (Sep 2000–Jun 2010. Other than the indicator lending rates and annual full-time earnings respectively used as proxies for the price and income effects, we specify a large number of other variables as demand factors, particularly reflecting the value of the asset for which retail finance demand is derived. These variously include the yield on indexed bonds as a proxy for inflation expectations, median housing prices, consumer sentiment indices as measures of consumer confidence, motor vehicle and retail trade sales, housing debt-to-housing assets as a measure of leverage, the proportion of protected margin lending, the available credit limit on credit cards, and the All Ordinaries Index. In the long run, we find significant price elasticities only for term loans and margin loans, and significant income elasticities of demand for housing loans, term loans and margin loans. We also find that the GFC only significantly affected the longrun demand for term loans and margin loans. In the short run, we find that the GFC has had a significant effect on the price elasticity of demand for term loans and margin loans. Expected inflation is also a key factor affecting retail finance demand. Overall, most of the submarkets in the analysis indicate that retail finance demand is certainly price inelastic but more income elastic than conventionally thought.

Estimating Price Elasticity of Demand for Motor Fuel in the Transport Sectors

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Olga Vasilyevna Mazurova

2015-03-01

Full Text Available Modeling of long-term forecasts of prices and demand on regional energy markets requires accounting for the future changes in the interactions between the greater economy and its energy sector, along with the possible emergence of new factors and specific regional features determining those interactions. The proposed approach allows the study of a correlation between demand and prices for motor fuel, taking into account the competition of energy carriers, the dynamics of energy prices, resource constraints, the use of new technologies and the uncertainty of input data. The main feature of the proposed approach is the combined estimation of the price elasticity of demand for motor fuel with optimization of fuel supply in the region. Thus the author determined elasticity of demand based on the comparison of economic efficiency of the use of different fuels. The study includes results of experimental calculations and forecasted price according to demand for motor fuel in freight transportation for the expected development conditions of the Far Eastern federal district

A co-integration analysis of the price and income elasticities of energy demand in Turkish agriculture

International Nuclear Information System (INIS)

Tuerkekul, Berna; Unakitan, Goekhan

2011-01-01

Agriculture has an important role in every country's development. Particularly, the contribution of agriculture to development and competitiveness is increasing with agricultural productivity growth. Productivity, in turn, is closely associated with direct and indirect use of energy as an input. Therefore, the importance of energy in agriculture cannot be denied as one of the basic inputs to the economic growth process. Following the importance of energy in Turkish agriculture, this study aims to estimate the long- and short-run relationship of energy consumption, agricultural GDP, and energy prices via co-integration and error correction (ECM) analysis. Annual data from 1970 to 2008 for diesel and electricity consumptions are utilized to estimate long-run and short-run elasticities. According to ECM analysis, for the diesel demand model, the long-run income and price elasticities were calculated as 1.47 and -0.38, respectively. For the electricity demand model, income and price elasticities were calculated at 0.19 and -0.72, respectively, in the long run. Briefly, in Turkey, support for energy use in agriculture should be continued in order to ensure sustainability in agriculture, increase competitiveness in international markets, and balance farmers' income. - Research highlights: → We estimate the long and short run elasticities for diesel and electricity demands in agriculture. → The long-run income and price elasticities calculated as 1.47 and 0.38, respectively for diesel. → The long run Income and price elasticities calculated as 0.19 and 0.72 for electricity.

Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care.

Science.gov (United States)

Kowalski, Amanda

2016-01-02

Efforts to control medical care costs depend critically on how individuals respond to prices. I estimate the price elasticity of expenditure on medical care using a censored quantile instrumental variable (CQIV) estimator. CQIV allows estimates to vary across the conditional expenditure distribution, relaxes traditional censored model assumptions, and addresses endogeneity with an instrumental variable. My instrumental variable strategy uses a family member's injury to induce variation in an individual's own price. Across the conditional deciles of the expenditure distribution, I find elasticities that vary from -0.76 to -1.49, which are an order of magnitude larger than previous estimates.

Price and income elasticities of crude oil import demand in South Africa: A cointegration analysis

International Nuclear Information System (INIS)

Ziramba, Emmanuel

2010-01-01

This paper examines the demand for imported crude oil in South Africa as a function of real income and the price of crude oil over the period 1980-2006. We carried out the Johansen co integration multivariate analysis to determine the long-run income and price elasticities. A unique long-run cointegration relationship exists between crude oil imports and the explanatory variables. The short-run dynamics are estimated by specifying a general error correction model. The estimated long-run price and income elasticities of -0.147 and 0.429 suggest that import demand for crude oil is price and income inelastic. There is also evidence of unidirectional long-run causality running from real GDP to crude oil imports. - Research Highlights: →The paper examines the demand for imported crude oil in South Africa over the period 1980-2006. → The estimated long-run price and income elasticities are -0.147 and 0.429, respectively. → There is evidence of unidirectional long-run causality running from real GDP to crude oil imports.

Price and income elasticities of crude oil import demand in South Africa: A cointegration analysis

Energy Technology Data Exchange (ETDEWEB)

Ziramba, Emmanuel, E-mail: zirame@unisa.ac.z [Department of Economics, University of South Africa, P.O Box 392, Unisa 0003 (South Africa)

2010-12-15

This paper examines the demand for imported crude oil in South Africa as a function of real income and the price of crude oil over the period 1980-2006. We carried out the Johansen co integration multivariate analysis to determine the long-run income and price elasticities. A unique long-run cointegration relationship exists between crude oil imports and the explanatory variables. The short-run dynamics are estimated by specifying a general error correction model. The estimated long-run price and income elasticities of -0.147 and 0.429 suggest that import demand for crude oil is price and income inelastic. There is also evidence of unidirectional long-run causality running from real GDP to crude oil imports. - Research Highlights: {yields}The paper examines the demand for imported crude oil in South Africa over the period 1980-2006. {yields} The estimated long-run price and income elasticities are -0.147 and 0.429, respectively. {yields} There is evidence of unidirectional long-run causality running from real GDP to crude oil imports.

Price elasticities in the German Statutory Health Insurance market before and after the health care reform of 2009.

Science.gov (United States)

Pendzialek, Jonas B; Danner, Marion; Simic, Dusan; Stock, Stephanie

2015-05-01

This paper investigates the change in price elasticity of health insurance choice in Germany after a reform of health insurance contributions. Using a comprehensive data set of all sickness funds between 2004 and 2013, price elasticities are calculated both before and after the reform for the entire market. The general price elasticity is found to be increased more than 4-fold from -0.81 prior to the reform to -3.53 after the reform. By introducing a new kind of health insurance contribution the reform seemingly increased the price elasticity of insured individuals to a more appropriate level under the given market parameters. However, further unintended consequences of the new contribution scheme were massive losses of market share for the more expensive sickness funds and therefore an undivided focus on pricing as the primary competitive element to the detriment of quality. Copyright © 2015 Elsevier Ireland Ltd. All rights reserved.

Price Elasticity of Demand: An A-Level Economics Revision Exercise.

Science.gov (United States)

Williams, Paul

1992-01-01

Presents a review exercise requiring students to sort diagrams and descriptions of price elasticity of demand. Reports that students are given jumbled diagrams and explanations that they must arrange in proper form. Reveals that some items are designed as distractors. (SG)

A co-integration analysis of the price and income elasticities of energy demand in Turkish agriculture

Energy Technology Data Exchange (ETDEWEB)

Tuerkekul, Berna, E-mail: berna.turkekul@ege.edu.t [Department of Agricultural Economics, Faculty of Agriculture, Ege University, 35100 Izmir (Turkey); Unakitan, Goekhan, E-mail: unakitan@nku.edu.t [Department of Agricultural Economics, Faculty of Agriculture, Namik Kemal University, Tekirdag (Turkey)

2011-05-15

Agriculture has an important role in every country's development. Particularly, the contribution of agriculture to development and competitiveness is increasing with agricultural productivity growth. Productivity, in turn, is closely associated with direct and indirect use of energy as an input. Therefore, the importance of energy in agriculture cannot be denied as one of the basic inputs to the economic growth process. Following the importance of energy in Turkish agriculture, this study aims to estimate the long- and short-run relationship of energy consumption, agricultural GDP, and energy prices via co-integration and error correction (ECM) analysis. Annual data from 1970 to 2008 for diesel and electricity consumptions are utilized to estimate long-run and short-run elasticities. According to ECM analysis, for the diesel demand model, the long-run income and price elasticities were calculated as 1.47 and -0.38, respectively. For the electricity demand model, income and price elasticities were calculated at 0.19 and -0.72, respectively, in the long run. Briefly, in Turkey, support for energy use in agriculture should be continued in order to ensure sustainability in agriculture, increase competitiveness in international markets, and balance farmers' income. - Research highlights: {yields} We estimate the long and short run elasticities for diesel and electricity demands in agriculture. {yields} The long-run income and price elasticities calculated as 1.47 and 0.38, respectively for diesel. {yields} The long run Income and price elasticities calculated as 0.19 and 0.72 for electricity.

Income inequality and price elasticity of market demand: the case of crossing Lorenz curves

OpenAIRE

Ibragimov, M; Ibragimov, R; Kattuman, Paul Antony; Ma, J

2017-01-01

This paper extends Ibragimov and Ibragimov (Econ Theory 32:579–587, 2007) in which the effect of changes income inequality on the price elasticity of market demand is characterized for the class of income distribution changes occurring through non-intersecting Lorenz curve shifts. We derive sufficient conditions for increase/decrease in price elasticity of market demand, under general changes in income distribution, allowing Lorenz curves to intersect as they shift. We conclude by drawing out...

Some Key Issues in Policy, Pricing, Regulation, and Financing of Irrigation Development in India Today

OpenAIRE

Morris, Sebastian

2005-01-01

In this paper we discuss the stylised problems relating to water and irrigation in India and argue that most of the inefficiencies, misuse and environmental damage have their roots in the mispricing of water and electricity. Since the only kind of subsidies thus far used are price based input subsidies they end up distorting the allocative prices, from which the other distortions follow. The problems of the sector can be overcome by changing the method of subsidisation. Converting price based...

Price elasticity of Swiss motor fuel demand; Elasticite-prix de la demande d'essence en Suisse

Energy Technology Data Exchange (ETDEWEB)

Baranzini, A. [Haute Ecole de Gestion de Geneve (HEG-Geneve), Centre de Recherche Appliquee en Gestion (CRAG), Carouge (Switzerland); Neto, D.; Weber, S. [Universite de Geneve, Laboratoire d' Economie Appliquee (LEA), Geneve (Switzerland)

2009-07-15

This report for the Swiss Federal Office of Energy (SFOE) by the University of Geneva takes a look at the price elasticity of motor fuel demand in Switzerland. Macro-economic data on petrol and diesel consumption is used to calculate short and long-term price elasticity. Various factors that have an influence on prices are discussed. Data for the period 1970 - 2008 is used. A method developed by Engle and Granger is used to examine short and long-term developments in this area. A large number of variables are used in mathematical models to explain price developments. The methods used are described and the results are presented in tabular form. Various external effects such the oil-price shocks and price developments in neighbouring countries are examined.

Price and income elasticities of crude oil import demand in South Africa. A cointegration analysis

Energy Technology Data Exchange (ETDEWEB)

Ziramba, Emmanuel [Department of Economics, University of South Africa, P.O Box 392, Unisa 0003 (South Africa)

2010-12-15

This paper examines the demand for imported crude oil in South Africa as a function of real income and the price of crude oil over the period 1980-2006. We carried out the Johansen co integration multivariate analysis to determine the long-run income and price elasticities. A unique long-run cointegration relationship exists between crude oil imports and the explanatory variables. The short-run dynamics are estimated by specifying a general error correction model. The estimated long-run price and income elasticities of -0.147 and 0.429 suggest that import demand for crude oil is price and income inelastic. There is also evidence of unidirectional long-run causality running from real GDP to crude oil imports. (author)

Using FRED Data to Teach Price Elasticity of Demand

Science.gov (United States)

Méndez-Carbajo, Diego; Asarta, Carlos J.

2017-01-01

In this article, the authors discuss the use of Federal Reserve Economic Data (FRED) statistics to teach the concept of price elasticity of demand in an introduction to economics course. By using real data in its computation, they argue that instructors can create a value-adding context for illustrating and applying a foundational concept in…

Water Authorities’ Pricing Strategies to Recover Supply Costs in the Absence of Water Metering for Irrigated Agriculture

Directory of Open Access Journals (Sweden)

Alban Lika

2017-11-01

Full Text Available Most of the irrigated agricultural regions in Europe are supplied by surface irrigation networks managed by local water authorities (WAs. Under such conditions, WAs are not able to fully monitor water usage and farmers have an information advantage vis-a-vis the WA. This results in the water authority suffering ‘pricing failure’ if it decides to apply an incentive pricing strategy (tariffs proportional to the alleged water uses. Indeed, farmers could exploit their information advantage by behaving in an opportunistic manner, withdrawing more water than declared, and ultimately paying less than they should. This situation could also undermine the efficacy and the efficiency of the WA incentive pricing strategies. This paper analyses incentive water pricing schemes under asymmetric information by the means of a Principal-Agent model. The Agency problem between the WA and farmers is addressed by introducing a monitoring strategy that would enable the WA to detect farms action. In doing so, we compare incentive strategies with flat rate water pricing and investigate under what conditions the WA might provide/not provide incentive water pricing in the absence of water metering.

Simulation of Farmers’ Response to Irrigation Water Pricing and Rationing Policies (Case Study: Zabol City

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abouzar parhizkari

2014-10-01

Full Text Available Considering that agricultural sector is the largest consumer of water, presenting integrated management for water resources and formulating effective policies to increase water productivity in this sector is essential. Therefore, using economic modeling , this study simulated the farmers’ responses to irrigation water pricing and rationing policies in Zabol city. To achieve the study purpose, the State Wide Agricultural Production Model and Positive Mathematical Programming were applied. The required data for the years 2010-2011 was collected by completing questionnaires and collecting data sets from the relevant agencies of Zabol city in personal attendance. The results showed that imposing irrigation water pricing and rationing policies in Zabol city leads to a reduction in the total cultivated area by 9/54 and 5/14 percent and a reduction in the water consumption by 6/23 and 7/01 percent, compared to the base year. Ultimately, irrigation water rationing policy, considering frugality of 18/9 million m3 of water, as the appropriate solution for the sustainability of water resources of Zabol city was proposed.

Using the Price Elasticity of Demand in Educational Decision Making.

Science.gov (United States)

Smith, Joseph D.; Moracco, Judy N.

1984-01-01

Describes a study and methods used by Navy Campus to choose a funding arrangement that would make the best use of the money available for voluntary educational purposes. Discusses modifying the economic concept of price elasticity to the interests of educationally oriented audiences. (JOW)

The Pricing of European Options Under the Constant Elasticity of Variance with Stochastic Volatility

Science.gov (United States)

Bock, Bounghun; Choi, Sun-Yong; Kim, Jeong-Hoon

This paper considers a hybrid risky asset price model given by a constant elasticity of variance multiplied by a stochastic volatility factor. A multiscale analysis leads to an asymptotic pricing formula for both European vanilla option and a Barrier option near the zero elasticity of variance. The accuracy of the approximation is provided in a rigorous manner. A numerical experiment for implied volatilities shows that the hybrid model improves some of the well-known models in view of fitting the data for different maturities.

Analysis of transmission elasticity of international prices for sugar prices in Brazil: an application of the Structural Model

Directory of Open Access Journals (Sweden)

Mario Antonio Margarido

2018-01-01

Full Text Available This study aims to determine and analyze the spatial elasticity (or horizontal of price transmission between international sugar prices and the average price received by the Brazilian exporter of sugar, using the Structural Model. The data used are from January/2004 to November/2015. As a result, variations of 1% in the international sugar price are transmitted to the average price received by Brazilian sugar exporters with a magnitude of 0.3% on average, setting inelastic relationship between the two variables and, consequently, the non-occurrence of the law of one price. So, there are mechanisms in this market that are hindering the full functioning of the arbitration. This situation is not unusual, because the sugar is one of the most commercially protected product and suffer much interference.

Estimating cross-price elasticity of e-cigarettes using a simulated demand procedure.

Science.gov (United States)

Grace, Randolph C; Kivell, Bronwyn M; Laugesen, Murray

2015-05-01

Our goal was to measure the cross-price elasticity of electronic cigarettes (e-cigarettes) and simulated demand for tobacco cigarettes both in the presence and absence of e-cigarette availability. A sample of New Zealand smokers (N = 210) completed a Cigarette Purchase Task to indicate their demand for tobacco at a range of prices. They sampled an e-cigarette and rated it and their own-brand tobacco for favorability, and indicated how many e-cigarettes and regular cigarettes they would purchase at 0.5×, 1×, and 2× the current market price for regular cigarettes, assuming that the price of e-cigarettes remained constant. Cross-price elasticity for e-cigarettes was estimated as 0.16, and was significantly positive, indicating that e-cigarettes were partially substitutable for regular cigarettes. Simulated demand for regular cigarettes at current market prices decreased by 42.8% when e-cigarettes were available, and e-cigarettes were rated 81% as favorably as own-brand tobacco. However when cigarettes cost 2× the current market price, significantly more smokers said they would quit (50.2%) if e-cigarettes were not available than if they were available (30.0%). Results show that e-cigarettes are potentially substitutable for regular cigarettes and their availability will reduce tobacco consumption. However, e-cigarettes may discourage smokers from quitting entirely as cigarette price increases, so policy makers should consider maintaining a constant relative price differential between e-cigarettes and tobacco cigarettes. © The Author 2014. Published by Oxford University Press on behalf of the Society for Research on Nicotine and Tobacco. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com.

Willingness to pay and price elasticities of demand for energy-efficient appliances: Combining the hedonic approach and demand systems

Energy Technology Data Exchange (ETDEWEB)

Galarraga, Ibon, E-mail: ibon.galarraga@bc3research.org; Gonzalez-Eguino, Mikel, E-mail: mikel.gonzalez@bc3research.org; Markandya, Anil, E-mail: anil.markandya@bc3research.org

2011-12-15

This article proposes a combined approach for estimating willingness to pay for the attributes represented by energy efficiency labels and providing reliable price elasticities of demand (own and cross) for close substitutes (e.g. those with low energy efficiency and those with higher energy efficiency). This is done by using the results of the hedonic approach together with the Quantity Based Demand System (QBDS) model. The elasticity results obtained with the latter are then compared with those simulated using the Linear Almost Ideal Demand System (LA/AIDS). The methodology is applied to the dishwasher market in Spain: it is found that 15.6% of the final price is actually paid for the energy efficiency attribute. This accounts for about Euro 80 of the average market price. The elasticity results confirm that energy efficient appliances are more price elastic than regular ones. - Highlights: > The article shows a combined approach for estimating willingness to pay for energy efficiency labels and price elasticities. > The results of the hedonic approach is used together with the Quantity Based Demand System (QBDS) model. > The elasticity results are compared with those simulated using the Linear Almost Ideal Demand System (LA/AIDS). > The methodology is applied to the dishwasher market in Spain.

Economic analysis of the water demand in the hotels and restaurants sector: Shadow prices and elasticities

Science.gov (United States)

Angulo, Ana; Atwi, Majed; Barberán, Ramón; Mur, Jesús

2014-08-01

Despite the growing economic importance of tourism, and its impact on relative water shortage, little is known about the role that water plays in the productive process of hotels and restaurants and, therefore, the possible implications of water demand management policy for this sector. This study aims to fill this gap. It is based on the microdata of 676 firms in the sector, operating in the city of Zaragoza (Spain) for a 12 year period. Based on the Translog cost function, we estimate the shadow price of water in the short run and, from a long-run perspective, its direct price elasticity, its cross elasticities relative to labor, capital, and supplies, and its elasticity with respect to the level of output. The results obtained show that water provides sector firms returns that are on average higher than its price, although in the case of hotels the margin is really narrow. This situation provides policy makers with a margin for applying price increases without affecting the sector's viability, with some caution in the case of hotels. Water demand elasticity equals -0.38 in the case of hotels, but it is not significant in the case of restaurants and bar-cafes; hence, only in hotels is there potential for influencing water use patterns, encouraging the resource's conservation through pricing policy. Moreover, capital is a substitutive factor of water, and the elasticity of water with respect to output is 0.40, all of which should also be considered by policy makers in water resource management.

Price elasticity of the demand for soft drinks, other sugar-sweetened beverages and energy dense food in Chile.

Science.gov (United States)

Guerrero-López, Carlos M; Unar-Munguía, Mishel; Colchero, M Arantxa

2017-02-10

Chile is the second world's largest per capita consumer of caloric beverages. Caloric beverages are associated with overweight, obesity and other chronic diseases. The objective of this study is to estimate the price elasticity of demand for soft drinks, other sugar-sweetened beverages and high-energy dense foods in urban areas in Chile in order to evaluate the potential response of households' consumption to changes in prices. We used microdata from the VII Family Budget Survey 2012-2013, which collects information on expenditures made by Chilean urban households on items such as beverages and foods. We estimated a Linear Approximation of an Almost Ideal Demand System Model to derive own and cross price elasticities of milk, coffee, tea and other infusions, plain water, soft drinks, other flavored beverages, sweet snacks, sugar and honey, and desserts. We considered the censored nature of the data and included the Inverse Mills Ratio in each equation of the demand system. We estimated a Quadratic Almost Ideal Demand System and a two-part model as sensitivity analysis. We found an own price-elasticity of -1.37 for soft drinks. This implies that a price increase of 10% is associated with a reduction in consumption of 13.7%. We found that the rest of food and beverages included in the demand system behave as substitutes for soft drinks. For instance, plain water showed a cross-price elasticity of 0.63: a 10% increase in price of soft drinks could lead to an increase of 6.3% of plain water. Own and cross price elasticities were similar between models. The demand of soft drinks is price sensitive among Chilean households. An incentive system such as subsidies to non-sweetened beverages and tax to soft drinks could lead to increases in the substitutions for other healthier beverages.

Price elasticity of the demand for soft drinks, other sugar-sweetened beverages and energy dense food in Chile

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Carlos M. Guerrero-López

2017-02-01

Full Text Available Abstract Background Chile is the second world’s largest per capita consumer of caloric beverages. Caloric beverages are associated with overweight, obesity and other chronic diseases. The objective of this study is to estimate the price elasticity of demand for soft drinks, other sugar-sweetened beverages and high-energy dense foods in urban areas in Chile in order to evaluate the potential response of households’ consumption to changes in prices. Methods We used microdata from the VII Family Budget Survey 2012–2013, which collects information on expenditures made by Chilean urban households on items such as beverages and foods. We estimated a Linear Approximation of an Almost Ideal Demand System Model to derive own and cross price elasticities of milk, coffee, tea and other infusions, plain water, soft drinks, other flavored beverages, sweet snacks, sugar and honey, and desserts. We considered the censored nature of the data and included the Inverse Mills Ratio in each equation of the demand system. We estimated a Quadratic Almost Ideal Demand System and a two-part model as sensitivity analysis. Results We found an own price-elasticity of −1.37 for soft drinks. This implies that a price increase of 10% is associated with a reduction in consumption of 13.7%. We found that the rest of food and beverages included in the demand system behave as substitutes for soft drinks. For instance, plain water showed a cross-price elasticity of 0.63: a 10% increase in price of soft drinks could lead to an increase of 6.3% of plain water. Own and cross price elasticities were similar between models. Conclusions The demand of soft drinks is price sensitive among Chilean households. An incentive system such as subsidies to non-sweetened beverages and tax to soft drinks could lead to increases in the substitutions for other healthier beverages.

Price elasticity of Swiss motor fuel demand; Elasticite-prix de la demande d'essence en Suisse

Energy Technology Data Exchange (ETDEWEB)

Baranzini, A. [Haute Ecole de Gestion de Geneve (HEG-Geneve), Centre de Recherche Appliquee en Gestion (CRAG), Carouge (Switzerland); Neto, D.; Weber, S. [Universite de Geneve, Laboratoire d' Economie Appliquee (LEA), Geneve (Switzerland)

2009-07-15

This report for the Swiss Federal Office of Energy (SFOE) by the University of Geneva takes a look at the price elasticity of motor fuel demand in Switzerland. Macro-economic data on petrol and diesel consumption is used to calculate short and long-term price elasticity. Various factors that have an influence on prices are discussed. Data for the period 1970 - 2008 is used. A method developed by Engle and Granger is used to examine short and long-term developments in this area. A large number of variables are used in mathematical models to explain price developments. The methods used are described and the results are presented in tabular form. Various external effects such the oil-price shocks and price developments in neighbouring countries are examined.

Public transportation research study : price elasticity of rideshare : commuter fringe benefits & parking cash-out

Science.gov (United States)

2004-06-01

The goal of this research project was to determine the price elasticity of rideshare with specific objectives of helping to assess what the effect on ridership would be if the effective price paid by the traveler was substantially reduced (i.e., incr...

A decision support for an integrated multi-scale analysis of irrigation: DSIRR.

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Bazzani, Guido M

2005-12-01

The paper presents a decision support designed to conduct an economic-environmental assessment of the agricultural activity focusing on irrigation called 'Decision Support for IRRigated Agriculture' (DSIRR). The program describes the effect at catchment scale of choices taken at micro scale by independent actors, the farmers, by simulating their decision process. The decision support (DS) has been thought of as a support tool for participatory water policies as requested by the Water Framework Directive and it aims at analyzing alternatives in production and technology, according to different market, policy and climate conditions. The tool uses data and models, provides a graphical user interface and can incorporate the decision makers' own insights. Heterogeneity in preferences is admitted since it is assumed that irrigators try to optimize personal multi-attribute utility functions, subject to a set of constraints. Consideration of agronomic and engineering aspects allows an accurate description of irrigation. Mathematical programming techniques are applied to find solutions. The program has been applied in the river Po basin (northern Italy) to analyze the impact of a pricing policy in a context of irrigation technology innovation. Water demand functions and elasticity to water price have been estimated. Results demonstrate how different areas and systems react to the same policy in quite a different way. While in the annual cropping system pricing seems effective to save the resource at the cost of impeding Water Agencies cost recovery, the same policy has an opposite effect in the perennial fruit system which shows an inelastic response to water price. The multidimensional assessment conducted clarified the trades-off among conflicting economic-social-environmental objectives, thus generating valuable information to design a more tailored mix of measures.

Effect of price elasticity of demand in monopolies with gradient adjustment

International Nuclear Information System (INIS)

Cavalli, Fausto; Naimzada, Ahmad

2015-01-01

Highlights: •A monopoly with isoelastic demand function is studied. •Reduced rationality monopolist uses gradient adjustment. •If marginal cost is small, increasing elasticity leads to stable dynamics. •For large marginal cost, dynamic can be unstable for both small and large elasticity. -- Abstract: We study a monopolistic market characterized by a constant elasticity demand function, in which the firm technology is described by a linear total cost function. The firm is assumed to be boundedly rational and to follow a gradient rule to adjust the production level in order to optimize its profit. We focus on what happens on varying the price elasticity of demand, studying the effect on the equilibrium stability. We prove that, depending on the relation between the market size and the marginal cost, two different scenarios are possible, in which elasticity has either a stabilizing or a mixed stabilizing/destabilizing effect

A Note on Aggregate Price-Level Elasticity and Supply-Side Shocks.

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Findlay, David W.

1995-01-01

Investigates factors that influence the short-run and long-run effects of supply-side shocks on aggregate income and tax revenues. Concludes that the long-run relationship between tax revenues and the tax rate is completely independent of price-level elasticity. (CFR)

Depressive symptoms, smoking, and cigarette price elasticity: results from a population-based survey in Taiwan.

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Chang, Hung-Hao; Chiang, Tung-Liang

2009-01-01

To understand the association between depressive symptoms and smoking. In addition, we investigate how smokers with and without depressive symptoms may respond to cigarette price change differently. We used data drawn from a nationally representative survey in Taiwan. Totally, 13,030 male adults were included in the analysis. Depressive symptoms were measured using the Taiwanese depression questionnaire. A logistic regression model was estimated to examine the odds ratio of smoking for those with depressive symptoms versus those without depressive symptoms. Focused on smokers, the ordinary least squares multivariate regression method was used to estimate the cigarette price elasticity. Compared to those without depressive symptoms, those with depressive symptoms were more likely to smoke (44.5 vs. 50.1%) and consume more cigarettes per day (18.4 vs. 21.0). The odds ratio of smoking for those with depressive symptoms, adjusted for demographic variables, was 1.3 (95% confidence interval, 1.1-1.6). The cigarette price elasticity was estimated at -0.82 and -0.41 for depressive smokers and non-depressive smokers, respectively. Although the association between depression and smoking had been documented, this study contributes to previous literature by investigating the extent to which cigarette price elasticities may differ between smokers with and without depressive symptoms. Results indicate that depressive smokers are more sensitive to the change of cigarette price. Therefore, tax/price increases can also be a very effective means of tobacco control for depressive smokers.

Estimation of Gasoline Price Elasticities of Demand for Automobile Fuel Efficiency in Korea: A Hedonic Approach

Energy Technology Data Exchange (ETDEWEB)

Lee, Sung Tae [Sungkyunkwan University, Seoul (Korea); Lee, Myunghun [Keimyung University, Taegu (Korea)

2001-03-01

This paper estimates the gasoline price elasticities of demand for automobile fuel efficiency in Korea to examine indirectly whether the government policy of raising fuel prices is effective in inducing less consumption of fuel, relying on a hedonic technique developed by Atkinson and Halvorsen (1984). One of the advantages of this technique is that the data for a single year, without involving variation in the price of gasoline, is sufficient in implementing this study. Moreover, this technique enables us to circumvent the multicollinearity problem, which had reduced reliability of the results in previous hedonic studies. The estimated elasticities of demand for fuel efficiency with respect to the price of gasoline, on average, is 0.42. (author). 30 refs., 3 tabs.

Price and income elasticities of demand for alcoholic beverages.

Science.gov (United States)

Ornstein, S I; Levy, D

1983-01-01

Estimating the demand for alcoholic beverages represents a difficult statistical problem. A number of studies have attempted to estimate the demand for beer, wine, distilled spirits, or total alcohol consumption. The results vary widely according to country of study, data used, and model and statistical technique. For the United States, most studies find the demand for beer to be relatively price inelastic, at around -0.3. The demand for distilled spirits appears to be unitary price elasticity or somewhat greater, around -1.5. The evidence on wine is too sketchy to draw any conclusions. There is no strong evidence of substitutability among beer, wine, and distilled spirits based on econometric models, nor evidence that advertising plays a strong role in the aggregate demand for beer, wine, or distilled spirits. The main policy implication is that price increases to control consumption will have a stronger impact on the consumption of distilled spirits than on beer.

Monetary Policy Rules, Supply Shocks, and the Price-Level Elasticity of Aggregate Demand: A Graphical Examination.

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Kyer, Ben L.; Maggs, Gary E.

1995-01-01

Utilizes two-dimensional price and output graphs to demonstrate the way that the price-level elasticity of aggregate demand affects alternative monetary policy rules designed to cope with random aggregate supply shocks. Includes graphs illustrating price-level, real Gross Domestic Product (GDP), nominal GDP, and nominal money supply targeting.…

The price elasticity of energy demand. The state of affairs in 1998

International Nuclear Information System (INIS)

De Groot, A.; Muskens, J; Velthuijsen, J.W.

1998-11-01

Within the framework of further development of energy taxes it is important to investigate the validity of the present tools by means of which the effects of energy taxes can be predicted. The estimation of the price elasticity of the energy consumption is an important aspect in the use of those tools. The results of a 1990 study on the possible effects of an energy tax are re-evaluated, based on a state-of-the-art of theoretical and empirical economic science with respect to elasticities. Also attention is paid to how the elasticities, as applied in relevant energy models, must be assessed. 43 refs

Price elasticity of on- and off-premises demand for alcoholic drinks: A Tobit analysis.

Science.gov (United States)

Jiang, Heng; Livingston, Michael; Room, Robin; Callinan, Sarah

2016-06-01

Understanding how price policies will affect alcohol consumption requires estimates of the impact of price on consumption among different types of drinkers and across different consumption settings. This study aims to estimate how changes in price could affect alcohol demand across different beverages, different settings (on-premise, e.g., bars, restaurants and off-premise, e.g., liquor stores, supermarkets), and different levels of drinking and income. Tobit analysis is employed to estimate own- and cross-price elasticities of alcohol demand among 11 subcategories of beverage based on beverage type and on- or off-premise supply, using cross-sectional data from the Australian arm of the International Alcohol Control Survey 2013. Further elasticity estimates were derived for sub-groups of drinkers based on their drinking and income levels. The results suggest that demand for nearly every subcategory of alcohol significantly responds to its own price change, except for on-premise spirits and ready-to-drink spirits. The estimated demand for off-premise beverages is more strongly affected by own price changes than the same beverages in on-premise settings. Demand for off-premise regular beer and off-premise cask wine is more price responsive than demand for other beverages. Harmful drinkers and lower income groups appear more price responsive than moderate drinkers and higher income groups. Our findings suggest that alcohol price policies, such as increasing alcohol taxes or introducing a minimum unit price, can reduce alcohol demand. Price appears to be particularly effective for reducing consumption and as well as alcohol-related harm among harmful drinkers and lower income drinkers. Copyright © 2016 Elsevier Ireland Ltd. All rights reserved.

PRICE ELASTICITY OF SUPPLY OF BOTTLED QUALITY WHITE WINE IN THE CZECH REPUBLIC

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Pavel SYROVÁTKA

2014-11-01

Full Text Available This paper is focused on the supply of the Czech producers of bottled quality white wine. Namely, a dependence of their sales of this wine category on the market price of bottled quality white wine was examined. Monthly data from the CZSO and SZIF database, years 2004–2012, were used for the price-supply analysis. Price-supply reactions of the Czech wine producers were investigated through two-stage cointegration method developed by Engle and Granger. Short-term and long-term price elasticity of studied market supply was based on the error correction model designed and statistically verified by the authors.

China's medical savings accounts: an analysis of the price elasticity of demand for health care.

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Yu, Hao

2017-07-01

Although medical savings accounts (MSAs) have drawn intensive attention across the world for their potential in cost control, there is limited evidence of their impact on the demand for health care. This paper is intended to fill that gap. First, we built up a dynamic model of a consumer's problem of utility maximization in the presence of a nonlinear price schedule embedded in an MSA. Second, the model was implemented using data from a 2-year MSA pilot program in China. The estimated price elasticity under MSAs was between -0.42 and -0.58, i.e., higher than that reported in the literature. The relatively high price elasticity suggests that MSAs as an insurance feature may help control costs. However, the long-term effect of MSAs on health costs is subject to further analysis.

Price elasticity of demand for crude oil: estimates for 23 countries

International Nuclear Information System (INIS)

Cooper, J.C.B.

2003-01-01

This paper uses a multiple regression model derived from an adaptation of Nerlove's partial adjustment model to estimate both the short-run and long-run elasticities of demand for crude oil in 23 countries. The estimates so obtained confirm that the demand for crude oil internationally is highly insensitive to changes in price. (author)

Hourly price elasticity pattern of electricity demand in the German day-ahead market

OpenAIRE

Knaut, Andreas; Paulus, Simon

2016-01-01

System security in electricity markets relies crucially on the interaction between demand and supply over time. However, research on electricity markets has been mainly focusing on the supply side arguing that demand is rather inelastic. Assuming perfectly inelastic demand might lead to delusive statements regarding the price formation in electricity markets. In this article we quantify the short-run price elasticity of electricity demand in the German day-ahead market and show that demand is...

Price and income elasticities of demand for passenger transport fuels in Spain. Implications for public policies

International Nuclear Information System (INIS)

Romero-Jordan, Desiderio; Del Rio, Pablo; Jorge-Garcia, Marta; Burguillo, Mercedes

2010-01-01

The significant increase in passenger transport activity (cars) experienced by Spain and its associated increase in energy consumption have several associated negative aspects, including a greater dependence on foreign energy sources and higher GHG emissions. Therefore, reducing the level of transport activity would bring important socioeconomic and environmental benefits. The aim of this paper, which focuses on energy consumption in the passenger transport, is fourfold: (1) to provide a diagnostic of energy consumption in the Spanish passenger transport system and the related problems; (2) to develop a model to calculate price and income elasticities of demand for transport fuel; (3) to apply this model to the Spanish passenger transport sector; (4) to infer policy recommendations derived from the results of the diagnostic and the model. It is claimed that, in view of those low price elasticities and high income elasticities and if a reduction in the scale of transport activity is deemed socially desirable, a combination of instruments is necessary. Fuel taxes play an important role within this combination. Apart from their long-term effects, the low price elasticity of demand for transport fuel would allow the collection of a significant amount of revenues, which could eventually be earmarked to encourage reductions in private transport demand and modal shifts with other instruments. (author)

Price and income elasticities of demand for passenger transport fuels in Spain. Implications for public policies

Energy Technology Data Exchange (ETDEWEB)

Romero-Jordan, Desiderio [Universidad Rey Juan Carlos, Madrid (Spain); Del Rio, Pablo [Institute for Public Goods and Policies (IPP), Consejo Superior de Investigaciones Cientificas (CSIC), C/Albasanz, 26-28, Madrid 28037 (Spain); Jorge-Garcia, Marta [Universidad de Leon (Spain); Burguillo, Mercedes [Universidad de Alcala (Spain)

2010-08-15

The significant increase in passenger transport activity (cars) experienced by Spain and its associated increase in energy consumption have several associated negative aspects, including a greater dependence on foreign energy sources and higher GHG emissions. Therefore, reducing the level of transport activity would bring important socioeconomic and environmental benefits. The aim of this paper, which focuses on energy consumption in the passenger transport, is fourfold: (1) to provide a diagnostic of energy consumption in the Spanish passenger transport system and the related problems; (2) to develop a model to calculate price and income elasticities of demand for transport fuel; (3) to apply this model to the Spanish passenger transport sector; (4) to infer policy recommendations derived from the results of the diagnostic and the model. It is claimed that, in view of those low price elasticities and high income elasticities and if a reduction in the scale of transport activity is deemed socially desirable, a combination of instruments is necessary. Fuel taxes play an important role within this combination. Apart from their long-term effects, the low price elasticity of demand for transport fuel would allow the collection of a significant amount of revenues, which could eventually be earmarked to encourage reductions in private transport demand and modal shifts with other instruments. (author)

Price elasticity of the demand for sugar sweetened beverages and soft drinks in Mexico.

Science.gov (United States)

Colchero, M A; Salgado, J C; Unar-Munguía, M; Hernández-Ávila, M; Rivera-Dommarco, J A

2015-12-01

A large and growing body of scientific evidence demonstrates that sugar drinks are harmful to health. Intake of sugar-sweetened beverages (SSB) is a risk factor for obesity and type 2 diabetes. Mexico has one of the largest per capita consumption of soft drinks worldwide and high rates of obesity and diabetes. Fiscal approaches such as taxation have been recommended as a public health policy to reduce SSB consumption. We estimated an almost ideal demand system with linear approximation for beverages and high-energy food by simultaneous equations and derived the own and cross price elasticities for soft drinks and for all SSB (soft drinks, fruit juices, fruit drinks, flavored water and energy drinks). Models were stratified by income quintile and marginality index at the municipality level. Price elasticity for soft drinks was -1.06 and -1.16 for SSB, i.e., a 10% price increase was associated with a decrease in quantity consumed of soft drinks by 10.6% and 11.6% for SSB. A price increase in soft drinks is associated with larger quantity consumed of water, milk, snacks and sugar and a decrease in the consumption of other SSB, candies and traditional snacks. The same was found for SSB except that an increase in price of SSB was associated with a decrease in snacks. Higher elasticities were found among households living in rural areas (for soft drinks), in more marginalized areas and with lower income. Implementation of a tax to soft drinks or to SSB could decrease consumption particularly among the poor. Substitutions and complementarities with other food and beverages should be evaluated to assess the potential impact on total calories consumed. Copyright © 2015 The Authors. Published by Elsevier B.V. All rights reserved.

Understanding Heterogeneity in Price Elasticities in the Demand for Alcohol for Older Individuals

Science.gov (United States)

Ayyagari, Padmaja; Deb, Partha; Fletcher, Jason; Gallo, William; Sindelar, Jody L.

2013-01-01

This paper estimates the price elasticity of demand for alcohol using Health and Retirement Study data. To account for unobserved heterogeneity in price responsiveness, we use finite mixture models. We recover two latent groups, one is significantly responsive to price, but the other is unresponsive. The group with greater responsiveness is disadvantaged in multiple domains, including health, financial resources, education and perhaps even planning abilities. These results have policy implications. The unresponsive group drinks more heavily, suggesting that a higher tax would fail to curb the negative alcohol-related externalities. In contrast, the more disadvantaged group is more responsive to price, thus suffering greater deadweight loss, yet this group consumes fewer drinks per day and might be less likely to impose negative externalities. PMID:22162113

The impact of introducing patient co-payments in Germany on the use of IVF and ICSI: a price-elasticity of demand assessment.

Science.gov (United States)

Connolly, M P; Griesinger, G; Ledger, W; Postma, M J

2009-11-01

Authorities concerned by rising healthcare costs have a tendency to target reproductive treatments because of the perception that infertility is a low priority. In 2004 German health authorities introduced a 50% co-payment for patients, in an effort to save cost. We explored the impact of this pricing policy on the utilization of reproductive treatments in Germany. Using aggregated annual in-vitro fertilization (IVF) and intracytoplasmic sperm injection (ICSI) cycle data in Germany, we evaluated the relationship between changes in the number of cycles in relation to changes in costs faced by consumers following the introduction of a patient co-payment from 'no fees' to 1500-2000 euros by estimating the short-run price-elasticity of demand. The impact of introducing patient co-payments for IVF/ICSI on the likelihood of switching to other low-cost fertility treatments was evaluated using the cross-price elasticity methodology. RESULTS The reduction in demand for IVF and ICSI cycles in the year following the introduction of patient co-payments resulted in elasticities of -0.41 and -0.34, respectively. The price-elasticity for the combined reduction of IVF/ICSI in relation to the co-payment was estimated to be -0.36. The cross-price elasticity for clomifene was close to zero (-0.01) suggesting that demand for these interventions are independent of each other and no substitution occurred. We report price elasticities for IVF and ICSI of -0.41 and -0.34 after introducing a 500-2000 euros co-payment. These findings likely represent short-run elasticities that are likely to vary over time as factors that influence the supply and demand for fertility treatments change.

Switching gains and health plan price elasticities: 20 years of managed competition reforms in The Netherlands.

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Douven, Rudy; Katona, Katalin; T Schut, Frederik; Shestalova, Victoria

2017-11-01

In this paper we estimate health plan price elasticities and financial switching gains for consumers over a 20-year period in which managed competition was introduced in the Dutch health insurance market. The period is characterized by a major health insurance reform in 2006 to provide health insurers with more incentives and tools to compete, and to provide consumers with a more differentiated choice of products. Prior to the reform, in the period 1995-2005, we find a low number of switchers, between 2 and 4% a year, modest average total switching gains of 2 million euros per year and short-term health plan price elasticities ranging from -0.1 to -0.4. The major reform in 2006 resulted in an all-time high switching rate of 18%, total switching gains of 130 million euros, and a high short-term price elasticity of -5.7. During 2007-2015 switching rates returned to lower levels, between 4 and 8% per year, with total switching gains in the order of 40 million euros per year on average. Total switching gains could have been 10 times higher if all consumers had switched to one of the cheapest plans. We find short-term price elasticities ranging between -0.9 and -2.2. Our estimations suggest substantial consumer inertia throughout the entire period, as we find degrees of choice persistence ranging from about 0.8 to 0.9.

Price elasticities, policy measures and actual developments in household energy consumption - A bottom up analysis for the Netherlands

International Nuclear Information System (INIS)

Boonekamp, Piet G.M.

2007-01-01

In the Netherlands it seems likely that the large number of new policy measures in the past decade has influenced the response of households to changing prices. To investigate this issue the energy trends in the period 1990-2000 have been simulated with a bottom-up model, applied earlier for scenario studies, and extensive data from surveys. For a number of alternative price cases the elasticity values found are explained using the bottom-up changes in energy trends. One finding is that the specific set of saving options defines for a great part the price response. The price effect has been analysed too in combination with the policy measures standards, subsidies and energy taxes. The simulation results indicate that the elasticity value could be 30-40% higher without these measures. (author)

Estimating the price elasticity of beer: meta-analysis of data with heterogeneity, dependence, and publication bias.

Science.gov (United States)

Nelson, Jon P

2014-01-01

Precise estimates of price elasticities are important for alcohol tax policy. Using meta-analysis, this paper corrects average beer elasticities for heterogeneity, dependence, and publication selection bias. A sample of 191 estimates is obtained from 114 primary studies. Simple and weighted means are reported. Dependence is addressed by restricting number of estimates per study, author-restricted samples, and author-specific variables. Publication bias is addressed using funnel graph, trim-and-fill, and Egger's intercept model. Heterogeneity and selection bias are examined jointly in meta-regressions containing moderator variables for econometric methodology, primary data, and precision of estimates. Results for fixed- and random-effects regressions are reported. Country-specific effects and sample time periods are unimportant, but several methodology variables help explain the dispersion of estimates. In models that correct for selection bias and heterogeneity, the average beer price elasticity is about -0.20, which is less elastic by 50% compared to values commonly used in alcohol tax policy simulations. Copyright © 2013 Elsevier B.V. All rights reserved.

Price elasticity of demand for psychiatric consultation in a Nigerian psychiatric service.

Science.gov (United States)

Esan, Oluyomi

2016-12-01

This paper addresses price elasticity of demand (PED) in a region where most patients make payments for consultations out of pocket. PED is a measure of the responsiveness of the quantity demanded of goods or services to changes in price. The study was done in the context of an outpatient psychiatric clinic in a sub -Saharan African country. The study was performed at the University College Hospital (UCH), Ibadan, Nigeria. Aggregate data were collected on weekly clinic attendance over a 24-month period October 2008 - September 2010 representing 12 months before, to 12months after a 67% increase in price of outpatient psychiatric consultation. The average weekly clinic attendance prior to the increase was compared to the average clinic attendance after the price increase. Arc-PED for consultation was also estimated. Clinic attendance dropped immediately and significantly in the weeks following the price increase. There was a 34.4% reduction in average weekly clinic attendance. Arc-PED for psychiatric consultation was -0.85. In comparison to reported PED on health care goods and services, this study finds a relatively high PED in psychiatric consultation following an increase in price of user fees of psychiatric consultation.

Long term fuel price elasticity: effects on mobility tool ownership and residential location choice - Final report

Energy Technology Data Exchange (ETDEWEB)

Erath, A.; Axhausen, K. W.

2010-04-15

This comprehensive final report for the Swiss Federal Office of Energy (SFOE) examines the long-term effects of fuel price elasticity. The study analyses how mobility tool usage and ownership as well as residence location choice are affected by rising fuel costs. Based on econometric models, long-term fuel price elasticity is derived. The authors quote that the demand reactions to higher fuel prices mainly observed are the reduction of mileage and the consideration of smaller-engined and diesel-driven cars. As cars with natural gas powered engines and electric drives were hardly considered in the survey, the results of the natural gas model can, according to the authors, only serve as a trend. No stable model could be estimated for the demand and usage of electric cars. A literature overview is presented and the design of the survey is discussed, whereby socio-demographical variables and the effects of price and residence changes are discussed. Modelling of mobility tool factors and results obtained are looked at. Finally, residence choice factors are modelled and discussed. Several appendices complete the report.

Elasticity of Vehicle Miles of Travel to Changes in the Price of Gasoline and the Cost of Driving in Texas

Energy Technology Data Exchange (ETDEWEB)

Wenzel, Tom P.; Fujita, K. Sydny

2018-03-28

This report examines the sensitivity of annual vehicle miles of travel (VMT) of light-duty vehicles to the price of gasoline, commonly referred to as the elasticity of demand for VMT to the price of gasoline; the fuel-economy-related rebound effect is generally assumed to be of the same magnitude as the VMT elasticity of gas price or driving cost. We use detailed odometer readings from over 30 million vehicles in four urban areas of Texas, over a six-year period. We account for economic conditions over this period, as well as vehicle age. Following the literature we include fixed effects by vehicle make and individual vehicle, as well as the effect of adding an instrument to predict monthly gasoline price independent of any influences of demand for gasoline on its price.

Functional forms and price elasticities in a discrete continuous choice model of the residential water demand

Science.gov (United States)

Vásquez Lavín, F. A.; Hernandez, J. I.; Ponce, R. D.; Orrego, S. A.

2017-07-01

During recent decades, water demand estimation has gained considerable attention from scholars. From an econometric perspective, the most used functional forms include log-log and linear specifications. Despite the advances in this field and the relevance for policymaking, little attention has been paid to the functional forms used in these estimations, and most authors have not provided justifications for their selection of functional forms. A discrete continuous choice model of the residential water demand is estimated using six functional forms (log-log, full-log, log-quadratic, semilog, linear, and Stone-Geary), and the expected consumption and price elasticity are evaluated. From a policy perspective, our results highlight the relevance of functional form selection for both the expected consumption and price elasticity.

Irrigation water policy analysis using a business simulation game

Science.gov (United States)

Buchholz, M.; Holst, G.; Musshoff, O.

2016-10-01

Despite numerous studies on farmers' responses to changing irrigation water policies, uncertainties remain about the potential of water pricing schemes and water quotas to reduce irrigation. Thus far, policy impact analysis is predominantly based upon rational choice models that assume behavioral assumptions, such as a perfectly rational profit-maximizing decision maker. Also, econometric techniques are applied which could lack internal validity due to uncontrolled field data. Furthermore, such techniques are not capable of identifying ill-designed policies prior to their implementation. With this in mind, we apply a business simulation game for ex ante policy impact analysis of irrigation water policies at the farm level. Our approach has the potential to reveal the policy-induced behavioral change of the participants in a controlled environment. To do so, we investigate how real farmers from Germany, in an economic experiment, respond to a water pricing scheme and a water quota intending to reduce irrigation. In the business simulation game, the participants manage a "virtual" cash-crop farm for which they make crop allocation and irrigation decisions during several production periods, while facing uncertain product prices and weather conditions. The results reveal that a water quota is able to reduce mean irrigation applications, while a water pricing scheme does not have an impact, even though both policies exhibit equal income effects for the farmers. However, both policies appear to increase the variation of irrigation applications. Compared to a perfectly rational profit-maximizing decision maker, the participants apply less irrigation on average, both when irrigation is not restricted and when a water pricing scheme applies. Moreover, the participants' risk attitude affects the irrigation decisions.

Pay less, consume more? The price elasticity of home care for the disabled elderly in France.

Science.gov (United States)

Roquebert, Quitterie; Tenand, Marianne

2017-09-01

Little is known about the price sensitivity of demand for home care of the disabled elderly. We partially fill this knowledge gap by using administrative data on the beneficiaries of the main French home care subsidy program in a department and exploiting interindividual variation in provider prices. We address the potential endogeneity of prices by taking advantage of the unequal spatial coverage of providers and instrumenting price by the number of municipalities served by a provider. We estimate a price elasticity of around -0.4 that is significantly different from both 0 and -1. This less than proportionate response of consumption to price has implications for the efficiency and redistributive impact of variation in the level of copayments in home care subsidy schemes. Copyright © 2017 John Wiley & Sons, Ltd.

Analysis on Price Elasticity of Energy Demand in East Asia: Empirical Evidence and Policy Implications for ASEAN and East Asia

OpenAIRE

Han PHOUMIN; Shigeru KIMURA

2014-01-01

This study uses time series data of selected ASEAN and East Asia countries to investigate the patterns of price and income elasticity of energy demand. Applying a dynamic log-linear energy demand model, both short-run and long-run price and income elasticities were estimated by country. The study uses three types of dependent variable “energy demand” such as total primary energy consumption (TPES), total final energy consumption (TFEC) and total final oil consumption (TFOC) to regress on its ...

Cheaper by the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance. NBER Working Paper No. 15461

Science.gov (United States)

Dynarski, Susan; Gruber, Jonathan; Li, Danielle

2009-01-01

The effect of vouchers on sorting between private and public schools depends upon the price elasticity of demand for private schooling. Estimating this elasticity is empirically challenging because prices and quantities are jointly determined in the market for private schooling. We exploit a unique and previously undocumented source of variation…

Estimates of price and income elasticity in Greece. Greek debt crisis transforming cigarettes into a luxury good: an econometric approach

Science.gov (United States)

Tarantilis, Filippos; Athanasakis, Kostas; Zavras, Dimitris; Vozikis, Athanassios; Kyriopoulos, Ioannis

2015-01-01

Objective During the past decades, smoking prevalence in Greece was estimated to be near or over 40%. Following a sharp fall in cigarette consumption, as shown in current data, our objective is to assess smokers’ sensitivity to cigarette price and consumer income changes as well as to project health benefits of an additional tax increase. Methods Cigarette consumption was considered as the dependent variable, with Weighted Average Price as a proxy for cigarette price, gross domestic product as a proxy for consumers’ income and dummy variables reflecting smoking restrictions and antismoking campaigns. Values were computed to natural logarithms and regression was performed. Then, four scenarios of tax increase were distinguished in order to calculate potential health benefits. Results Short-run price elasticity is estimated at −0.441 and short-run income elasticity is estimated at 1.040. Antismoking campaigns were found to have a statistically significant impact on consumption. Results indicate that, depending on the level of tax increase, annual per capita consumption could fall by at least 209.83 cigarettes; tax revenue could rise by more than €0.74 billion, while smokers could be reduced by up to 530 568 and at least 465 smoking-related deaths could be averted. Conclusions Price elasticity estimates are similar to previous studies in Greece, while income elasticity estimates are far greater. With cigarettes regarded as a luxury good, a great opportunity is presented for decisionmakers to counter smoking. Increased taxation, along with focused antismoking campaigns, law reinforcement (to ensure compliance with smoking bans) and intensive control for smuggling could invoke a massive blow to the tobacco epidemic in Greece. PMID:25564137

Tuition Elasticity of the Demand for Higher Education among Current Students: A Pricing Model.

Science.gov (United States)

Bryan, Glenn A.; Whipple, Thomas W.

1995-01-01

A pricing model is offered, based on retention of current students, that colleges can use to determine appropriate tuition. A computer-based model that quantifies the relationship between tuition elasticity and projected net return to the college was developed and applied to determine an appropriate tuition rate for a small, private liberal arts…

Short- and long-run time-of-use price elasticities in Swiss residential electricity demand

International Nuclear Information System (INIS)

Filippini, Massimo

2011-01-01

This paper presents an empirical analysis on the residential demand for electricity by time-of-day. This analysis has been performed using aggregate data at the city level for 22 Swiss cities for the period 2000-2006. For this purpose, we estimated two log-log demand equations for peak and off-peak electricity consumption using static and dynamic partial adjustment approaches. These demand functions were estimated using several econometric approaches for panel data, for example LSDV and RE for static models, and LSDV and corrected LSDV estimators for dynamic models. The attempt of this empirical analysis has been to highlight some of the characteristics of the Swiss residential electricity demand. The estimated short-run own price elasticities are lower than 1, whereas in the long-run these values are higher than 1. The estimated short-run and long-run cross-price elasticities are positive. This result shows that peak and off-peak electricity are substitutes. In this context, time differentiated prices should provide an economic incentive to customers so that they can modify consumption patterns by reducing peak demand and shifting electricity consumption from peak to off-peak periods. - Highlights: → Empirical analysis on the residential demand for electricity by time-of-day. → Estimators for dynamic panel data. → Peak and off-peak residential electricity are substitutes.

Green Power voluntary purchases: Price elasticity and policy analysis

International Nuclear Information System (INIS)

Mewton, Ross T.; Cacho, Oscar J.

2011-01-01

Green Power schemes offer electricity from renewable energy sources to customers for a higher price than ordinary electricity. This study examines the demand characteristics of Green Power in Australia and policies which could increase its sales. A sample of 250 pooled time series and cross sectional observations was used to estimate a statistically significant elasticity of demand for Green Power with respect to price of -0.96 with a 95% confidence interval of ±68%. The wide variation in market penetration between jurisdictions and between countries for Green Power, and the low awareness of Green Power found by surveys indicate that Green Power sales could be increased by appropriate marketing and government policies. The most cost effective means to increase sales was found to be advertising campaigns although only one Australian example was found, in the state of Victoria in 2005. It was also found that full tax deductibility of the Green Power premium to residential customers, exemption from the Goods and Services Tax and a tax rebate for Green Power are all probably less cost effective for promoting sales than direct government purchase of Green Power, in terms of cost per unit of increased sales.

Green Power voluntary purchases: Price elasticity and policy analysis

Energy Technology Data Exchange (ETDEWEB)

Mewton, Ross T., E-mail: rtmewton@hotmail.co [University of New England (Australia); Cacho, Oscar J. [School of Business Economics and Public Policy, School of Economics, University of New England, Armidale, NSW 2351 (Australia)

2011-01-15

Green Power schemes offer electricity from renewable energy sources to customers for a higher price than ordinary electricity. This study examines the demand characteristics of Green Power in Australia and policies which could increase its sales. A sample of 250 pooled time series and cross sectional observations was used to estimate a statistically significant elasticity of demand for Green Power with respect to price of -0.96 with a 95% confidence interval of {+-}68%. The wide variation in market penetration between jurisdictions and between countries for Green Power, and the low awareness of Green Power found by surveys indicate that Green Power sales could be increased by appropriate marketing and government policies. The most cost effective means to increase sales was found to be advertising campaigns although only one Australian example was found, in the state of Victoria in 2005. It was also found that full tax deductibility of the Green Power premium to residential customers, exemption from the Goods and Services Tax and a tax rebate for Green Power are all probably less cost effective for promoting sales than direct government purchase of Green Power, in terms of cost per unit of increased sales.

Green Power voluntary purchases. Price elasticity and policy analysis

Energy Technology Data Exchange (ETDEWEB)

Mewton, Ross T. [University of New England (Australia); Cacho, Oscar J. [School of Business Economics and Public Policy, School of Economics, University of New England, Armidale, NSW 2351 (Australia)

2011-01-15

Green Power schemes offer electricity from renewable energy sources to customers for a higher price than ordinary electricity. This study examines the demand characteristics of Green Power in Australia and policies which could increase its sales. A sample of 250 pooled time series and cross sectional observations was used to estimate a statistically significant elasticity of demand for Green Power with respect to price of -0.96 with a 95% confidence interval of {+-}68%. The wide variation in market penetration between jurisdictions and between countries for Green Power, and the low awareness of Green Power found by surveys indicate that Green Power sales could be increased by appropriate marketing and government policies. The most cost effective means to increase sales was found to be advertising campaigns although only one Australian example was found, in the state of Victoria in 2005. It was also found that full tax deductibility of the Green Power premium to residential customers, exemption from the Goods and Services Tax and a tax rebate for Green Power are all probably less cost effective for promoting sales than direct government purchase of Green Power, in terms of cost per unit of increased sales. (author)

Estimates of price and income elasticity in Greece. Greek debt crisis transforming cigarettes into a luxury good: an econometric approach.

Science.gov (United States)

Tarantilis, Filippos; Athanasakis, Kostas; Zavras, Dimitris; Vozikis, Athanassios; Kyriopoulos, Ioannis

2015-01-05

During the past decades, smoking prevalence in Greece was estimated to be near or over 40%. Following a sharp fall in cigarette consumption, as shown in current data, our objective is to assess smokers' sensitivity to cigarette price and consumer income changes as well as to project health benefits of an additional tax increase. Cigarette consumption was considered as the dependent variable, with Weighted Average Price as a proxy for cigarette price, gross domestic product as a proxy for consumers' income and dummy variables reflecting smoking restrictions and antismoking campaigns. Values were computed to natural logarithms and regression was performed. Then, four scenarios of tax increase were distinguished in order to calculate potential health benefits. Short-run price elasticity is estimated at -0.441 and short-run income elasticity is estimated at 1.040. Antismoking campaigns were found to have a statistically significant impact on consumption. Results indicate that, depending on the level of tax increase, annual per capita consumption could fall by at least 209.83 cigarettes; tax revenue could rise by more than €0.74 billion, while smokers could be reduced by up to 530 568 and at least 465 smoking-related deaths could be averted. Price elasticity estimates are similar to previous studies in Greece, while income elasticity estimates are far greater. With cigarettes regarded as a luxury good, a great opportunity is presented for decisionmakers to counter smoking. Increased taxation, along with focused antismoking campaigns, law reinforcement (to ensure compliance with smoking bans) and intensive control for smuggling could invoke a massive blow to the tobacco epidemic in Greece. Published by the BMJ Publishing Group Limited. For permission to use (where not already granted under a licence) please go to http://group.bmj.com/group/rights-licensing/permissions.

Temporary Water Markets in Oman

Directory of Open Access Journals (Sweden)

Slim Zekri

2006-01-01

Full Text Available Market vis-à-vis command and control approaches have been widely adopted in natural resource and environmental management since the 1980s. Adoption of markets in managing irrigation water resources is also emerging. It has been argued that markets are ineffective in managing the demand for irrigation water due to very low price elasticity. Most studies have been based on mathematical models simulating water markets and not on observed prices and quantities in real water markets since such data are rarely available. In Oman, perhaps in response to the extreme scarcity of water, elaborate water demand management institutions emulating markets have evolved and have been used for centuries. Water entitlements are leased based on prices through a community auction. The traded quantities of water and related prices have been recorded. This study uses this unique data set to estimate the elasticity of irrigation water. A log function on quantity and price of irrigation water is used with dummy variables on time and type of irrigation system. The price elasticity varies from -0.10 to -0.28, depending on the specifications of the econometric model. These estimates are higher than most estimates reported in past studies, indicating the efficacy of the indigenous market-based irrigation water management institution adopted in Oman.

When do price thresholds matter in retail categories?

OpenAIRE

Pauwels, Koen; Srinivasan, Shuba; Franses, Philip Hans

2007-01-01

textabstractMarketing literature has long recognized that brand price elasticity need not be monotonic and symmetric, but has yet to provide generalizable market-level insights on threshold-based price elasticity, asymmetric thresholds, and the sign and magnitude of elasticity transitions. This paper introduces smooth transition regression models to study threshold-based price elasticity of the top 4 brands across 20 fast-moving consumer good categories. Threshold-based price elasticity is fo...

Multi-Objective Demand Response Model Considering the Probabilistic Characteristic of Price Elastic Load

Directory of Open Access Journals (Sweden)

Shengchun Yang

2016-01-01

Full Text Available Demand response (DR programs provide an effective approach for dealing with the challenge of wind power output fluctuations. Given that uncertain DR, such as price elastic load (PEL, plays an important role, the uncertainty of demand response behavior must be studied. In this paper, a multi-objective stochastic optimization problem of PEL is proposed on the basis of the analysis of the relationship between price elasticity and probabilistic characteristic, which is about stochastic demand models for consumer loads. The analysis aims to improve the capability of accommodating wind output uncertainty. In our approach, the relationship between the amount of demand response and interaction efficiency is developed by actively participating in power grid interaction. The probabilistic representation and uncertainty range of the PEL demand response amount are formulated differently compared with those of previous research. Based on the aforementioned findings, a stochastic optimization model with the combined uncertainties from the wind power output and the demand response scenario is proposed. The proposed model analyzes the demand response behavior of PEL by maximizing the electricity consumption satisfaction and interaction benefit satisfaction of PEL. Finally, a case simulation on the provincial power grid with a 151-bus system verifies the effectiveness and feasibility of the proposed mechanism and models.

When Do Price Thresholds Matter in Retail Categories?

OpenAIRE

Koen Pauwels; Shuba Srinivasan; Philip Hans Franses

2007-01-01

Marketing literature has long recognized that brand price elasticity need not be monotonic and symmetric, but has yet to provide generalizable market-level insights on threshold-based price elasticity, asymmetric thresholds, and the sign and magnitude of elasticity transitions. This paper introduces smooth transition regression models to study threshold-based price elasticity of the top 4 brands across 20 fast-moving consumer good categories. Threshold-based price elasticity is found for 76% ...

The role of price elastic demand in market power in the Nordic electricity markets

International Nuclear Information System (INIS)

Ravn, H.F.

2004-01-01

The paper discusses the modelling and analysis of market power and price elastic demand in the Nordic electricity spot market, Nordpool. The modelling of market power in the electricity sector must take into account a number of features that are specific to the electricity sector. First, electricity cannot be stored, but must be produced simultaneously with consumption. This aspect is, however, modified by the possibility of using hydro reservoirs as an indirect electricity storage. Second, the electricity transmission network plays an important role by breaking the market into several geographically separate sub-markets with different prices. Moreover, the specific bottlenecks may differ from hour to hour, according to the balance between supply and demand in each sub-market. Third, the demand side is presently characterised by very limited experience with hour to-hour-changes in electricity prices and very limited experience with short time adjustments of electricity consumption in response to changes in the electricity price. In the present paper three basic models for supply side competition on the Nordpool spot market will be presented, viz., perfect competition, Cournot competition and Supply Function Equilibrium. The models represent price and quantity settlement, including determination of price areas (bottle necks), in accordance with the way the Nordpool market functions. The models will incorporate electricity demand which is responsive to the electricity price. The paper describes the role of demand response for the determination of the electricity prices in each of the three supply side competition models. (au)

Price Recall, Bertrand Paradox and Price Dispersion With Elastic Demand

NARCIS (Netherlands)

Carvalho, M.

2009-01-01

This paper studies the consequence of an imprecise recall of the price by the consumers in the Bertrand price competition model for a homogeneous good. It is shown that firms can exploit this weakness and charge prices above the competitive price. This markup increases for rougher recall of the

Testing viability of cross subsidy using time-variant price elasticities of industrial demand for electricity: Indian experience

International Nuclear Information System (INIS)

Chattopadhyay, Pradip

2007-01-01

Indian electric tariffs are characterized by very high rates for industrial and commercial classes to permit subsidized electric consumption by residential and agricultural customers. We investigate the viability of this policy using monthly data for 1997-2003 on electric consumption by a few large industrial customers under the aegis of a small distribution company in the state of Uttar Pradesh. For a given price/cost ratio, it can be shown that if the cross-subsidizing class' electricity demand is sufficiently elastic, increasing the class' rates fail to recover incremental cross-subsidy necessary to support additional revenues for subsidized classes. This suboptimality is tested by individually estimating time-variant price-elasticities of demand for these industrial customers using Box-Cox and linear regressions. We find that at least for some of these customers, cross-subsidy was suboptimal prior to as late as October 2001, when rates were changed following reforms

Testing viability of cross subsidy using time-variant price elasticities of industrial demand for electricity: Indian experience

Energy Technology Data Exchange (ETDEWEB)

Chattopadhyay, Pradip [New Hampshire Public Utilities Commission, 21 South Fruit Street, Suite 10, Concord NH 03301 (United States)]. E-mail: pradip.chattopadhyay@puc.nh.gov

2007-01-15

Indian electric tariffs are characterized by very high rates for industrial and commercial classes to permit subsidized electric consumption by residential and agricultural customers. We investigate the viability of this policy using monthly data for 1997-2003 on electric consumption by a few large industrial customers under the aegis of a small distribution company in the state of Uttar Pradesh. For a given price/cost ratio, it can be shown that if the cross-subsidizing class' electricity demand is sufficiently elastic, increasing the class' rates fail to recover incremental cross-subsidy necessary to support additional revenues for subsidized classes. This suboptimality is tested by individually estimating time-variant price-elasticities of demand for these industrial customers using Box-Cox and linear regressions. We find that at least for some of these customers, cross-subsidy was suboptimal prior to as late as October 2001, when rates were changed following reforms.

The elasticity of demand for gasoline in China

International Nuclear Information System (INIS)

Lin, C.-Y. Cynthia; Zeng, Jieyin

2013-01-01

This paper estimates the price and income elasticities of demand for gasoline in China. Our estimates of the intermediate-run price elasticity of gasoline demand range between −0.497 and −0.196, and our estimates of the intermediate-run income elasticity of gasoline demand range between 1.01 and 1.05. We also extend previous studies to estimate the vehicle miles traveled (VMT) elasticity and obtain a range from −0.882 to −0.579. - highlights: • The price elasticity of demand for gasoline in China is between −0.497 and −0.196. • The income elasticity of demand for gasoline in China is between 1.01 and 1.05. • The price elasticity of demand for VMT in China is between −0.882 and −0.579

Analysis of thermal coal pricing and the coal price distortion in China from the perspective of market forces

International Nuclear Information System (INIS)

Cui, Herui; Wei, Pengbang

2017-01-01

The price of thermal coal has always been the focus of the debate between coal mining industry and electric power industry. The thermal coal price is always lower than other same quality coal, and this phenomenon of thermal coal price distortion has been existing in China for a long time. The distortion coal price can not reflect the external cost and the resource scarcity of coal, which could result in environment deteriorating and inefficient resource allocation. This paper studied the phenomenon of thermal coal price distortion through economic theoretical modeling and empirical cointegration analysis from the perspective of market forces. The results show that thermal coal price is determined by electricity price, the prediction elasticity of a electricity enterprise, price elasticity of demand of electricity, the input prediction elasticity of a electricity enterprise and the price elasticity of supply of thermal coal. The main reason of coal price distortion is the unbalance market force of coal industry and thermal coal generation industry. The distortion rate of coal price is positively related to the market force of electric power industry and negatively related to the industrial concentration of coal industry. - Highlights: • This paper studied thermal coal pricing and the coal price distortion in China. • The main reason of coal price distortion is the unbalance market force. • Thermal coal price is also influenced by electricity price and price elasticity of demand of electricity. • The distortion rate of coal price is negatively related to the industrial concentration of coal industry.

On the Distance Dependence of the Price Elasticity of Telecommunications Demand; Meta-analysis, and Alternative Theoretical Backgrounds

NARCIS (Netherlands)

Ouwersloot, Hans; Rietveld, Piet

1997-01-01

The positive correlation between the absolute price elasticity of telecommunications demand and the distance of the calling relation is well known. In this paper we first present a meta-analysis of existing studies to buttress the distance dependence empirically. The analysis confirms the existence

Becker's rational addiction theory: An empirical test with price elasticities for distilled spirits in Denmark 1911-31.

Science.gov (United States)

Skog, Ole-Jørgen; Melberg, Hans Olav

2006-10-01

To test an implication of Becker's rational addiction theory, namely that price changes will lead both to simultaneous consumption changes as well as lagged changes (and potentially also immediate changes if future changes in prices are anticipated). Time-series analysis, first of aggregate sales of distilled spirits and prices, controlled for gross national product (GNP), and secondly of deaths from delirium tremens. Denmark 1911-31. Price changes were very large in the period 1916-18 due to shortages during World War I, and the Danish case can be conceived as a natural experiment. No evidence for lagged price effects in the expected direction was found. On the contrary, the evidence pointed in the opposite direction. The immediate reduction in sales following rising prices are, to some degree, counteracted by an adjustment in the opposite direction the following year. The delirium tremens data confirm this pattern. Becker's theory is not confirmed. Several possible explanations are discussed. If the pattern observed in these data is representative of a more general mechanism, current price elasticity estimates may be too high, by ignoring lagged compensatory effects.

Incentives and technologies for improving irrigation water use efficiency

Science.gov (United States)

Bruggeman, Adriana; Djuma, Hakan; Giannakis, Elias; Eliades, Marinos

2014-05-01

The European Water Framework Directive requires Member States to set water prices that provide adequate incentives for users to use water resources efficiently. These new water pricing policies need to consider cost recovery of water services, including financial, environmental and resource cost. Prices were supposed to have been set by 2010. So far the record has been mixed. The European Commission has sent reasoned opinions to a number of countries (Austria, Belgium, Denmark, Estonia, Finland, Germany, Hungary, Netherlands, Sweden) requesting them to adjust their national legislation to include all water services. Unbalanced water pricing may negatively affect the agricultural sector, especially in the southern EU countries, which are more dependent on irrigation water for production. The European Commission is funding several projects that aim to reduce the burden of increasing water prices on farmers by developing innovative technologies and decision support systems that will save water and increase productivity. The FP7 ENORASIS project (grant 282949) has developed a new integrated irrigation management decision support platform, which include high-resolution, ensemble weather forecasting, a GIS widget for the location of fields and sensors and a comprehensive decision support and database management software package to optimize irrigation water management. The field component includes wireless, solar-powered soil moisture sensors, small weather stations, and remotely controlled irrigation valves. A mobile App and a web-package are providing user-friendly interfaces for farmers, water companies and environmental consultants. In Cyprus, agricultural water prices have been set to achieve a cost recovery rate of 54% (2010). The pricing policy takes in consideration the social importance and financial viability of the agricultural sector, an important flexibility provided by the Water Framework Directive. The new price was set at 0.24 euro per m3 for water supply

Study design for a clinical trial to examine food price elasticity among participants in federal food assistance programs: A laboratory-based grocery store study

Directory of Open Access Journals (Sweden)

Zach Conrad

2018-06-01

Full Text Available We present a protocol for a study investigating the effect of food price changes on purchasing decisions among individuals participating in federal food assistance programs and among those not participating in these programs. We use a laboratory-based grocery store design, which provides greater control over factors influencing food purchasing than in situ experiments in actual grocery stores. We focus primarily, but not exclusively, on eggs because they are highly nutritious, easy to prepare, can be included in many different dishes, and are a part of a wide range of cultural food menus. The primary aim of this study is to compare the own-and cross-price elasticity of eggs between individuals participating in federal food assistance programs and those not participating in these programs. Our secondary aims are to 1 compare the own- and cross-price elasticity of eggs between overweight/obese individuals and non-overweight/obese individuals, 2 examine whether delay discounting moderates the effect of income on own- and cross-price elasticity, 3 examine whether subjective social status moderates the effect of participation in federal food assistance programs on the purchase of high nutrient-dense foods, and 4 examine whether usual psychological stress level moderates the effect of subjective social status on the purchase of high-nutrient dense foods. The results of this study will provide information about the drivers of food demand among low-income adults. A better understanding of these drivers is needed to develop effective nutrition interventions for this large population. Keywords: Price elasticity, Food assistance, Egg, Obesity, Social status, Stress

Poverty and price transmission

DEFF Research Database (Denmark)

Elleby, Christian

A key parameter determining the welfare impact from a world market shock is the transmission elasticity which measures the average domestic response to an international price change. Many studies have estimated price transmission elasticities for a large number of countries but the variation in t...

The Price Elasticity of Specialty Drug Use: Evidence from Cancer Patients in Medicare Part D.

Science.gov (United States)

Jung, Jeah Kyoungrae; Feldman, Roger; McBean, A Marshall

2017-12-01

Specialty drugs can bring substantial benefits to patients with debilitating conditions, such as cancer, but their costs are very high. Insurers/payers have increased patient cost-sharing for specialty drugs to manage specialty drug spending. We utilized Medicare Part D plan formulary data to create the initial price (cost-sharing in the initial coverage phase in Part D), and estimated the total demand (both on- and off-label uses) for specialty cancer drugs among elderly Medicare Part D enrollees with no low-income subsidies (non-LIS) as a function of the initial price. We corrected for potential endogeneity associated with plan choice by instrumenting the initial price of specialty cancer drugs with the initial prices of specialty drugs in unrelated classes. We report three findings. First, we found that elderly non-LIS beneficiaries with cancer were less likely to use a Part D specialty cancer drug when the initial price was high: the overall price elasticity of specialty cancer drug spending ranged between -0.72 and -0.75. Second, the price effect in Part D specialty cancer drug use was not significant among newly diagnosed patients. Finally, we found that use of Part B-covered cancer drugs was not responsive to the Part D specialty cancer drug price. As the demand for costly specialty drugs grows, it will be important to identify clinical circumstances where specialty drugs can be valuable and ensure access to high-value treatments.

Investor response to consumer elasticity

International Nuclear Information System (INIS)

Grenaa Jensen, Stine; Meibom, Peter; Ravn, H.F.; Straarup, Sarah

2004-01-01

In the Nordic electricity system there is considerable uncertainty with respect to the long-term development in production capacity. The process towards liberalisation of the electricity sector started in a situation with a large reserve margin, but this margin is gradually vanishing. Since the potential investors in new production capacity are unaccustomed with investments under the new regime it is unknown if and when investments will take place. The electricity price is the key market signal to potential investors. The price is settled as a balance between supply and demand, and it is generally assumed that the demand side has an important role in this, and increasingly so. However, since consumers have not earlier had the incentive to respond to electricity prices, no reliable estimate of demand elasticity is known. The purpose of the present study is to analyse the role of electricity demand elasticity for investments in new electricity production capacity. Electricity price scenarios generated with a partial equilibrium model (Balmorel) are combined with a model of investment decisions. In this, various scenarios concerning the development in the demand elasticity are used. The simulated investment decisions are taken in a stochastic, dynamic setting, where a key point is the timing of the investment decision in relation to the gathering of new information relative to the stochastic elements. Based on this, the consequences of the development in consumer price elasticity for investments in a base load and a peak load plant are investigated. The main result of the analysis is that peak load investments can be made unprofitable by the development in consumer price elasticity, such that an investor will tend to wait with his peak load investment, until the development in consumer price elasticity has been revealed. (au)

The pricing behavior comparison of Canada and Australia exporter in wheat international market using Pricing to Market (PTM) and Residual Demand Elasticity (RDE)

Science.gov (United States)

Wibowo, R. P.; Sumono; Iddrisu, Y.; Darus, M.; Sihombing, L. P.; Jufri

2018-02-01

This paper try to identify and examined the degree of market power on wheat international market by 2 major exporting countries comprising Canada and Australia by using the Pricing to Market (PTM) method and Residual Demand Elasticity (RDE) method. The PTM method found that Canada impose noncompetitive strategy by applying price discrimination and apply market power to their importing. Different results come from Australian exporter as they are not using their market power to the importing. Conflicting result arise from estimation using RDE and PTM method suggest that the need to extend the theoretical model of both model by expand its economic and econometric model to have consistent expected result theoretically and empirically.

Estimating Demand and Cross-Price Elasticity for Very Low Nicotine Content (VLNC) Cigarettes Using a Simulated Demand Task.

Science.gov (United States)

Tucker, Megan R; Laugesen, Murray; Grace, Randolph C

2017-03-03

Very Low Nicotine Content (VLNC) cigarettes might be useful as part of a tobacco control strategy, but relatively little is known about their acceptability as substitutes for regular cigarettes. We compared subjective effects and demand for regular cigarettes and Very Low Nicotine Content (VLNC) cigarettes, and estimated cross-price elasticity for VLNC cigarettes, using simulated demand tasks. 40 New Zealand smokers sampled a VLNC cigarette and completed Cigarette Purchase Tasks to indicate their demand for regular cigarettes and VLNC cigarettes at a range of prices, and a cross-price task indicating how many regular cigarettes and VLNC cigarettes they would purchase at 0.5x, 1x, and 2x the current market price for regular cigarettes, assuming the price of VLNC cigarettes remained constant. They also rated the subjective effects of the VLNC cigarette and their usual-brand regular cigarettes. Cross-price elasticity for VLNC cigarettes was estimated as 0.24 and was significantly positive, indicating that VLNC cigarettes are partially substitutable for regular cigarettes. VLNC cigarettes were rated as less satisfying and psychologically rewarding than regular cigarettes, but this was unrelated to demand or substitutability. VLNC cigarettes are potentially substitutable for regular cigarettes. Their availability may reduce tobacco consumption, nicotine intake and addiction; making it easier for smokers to quit. VLNC cigarettes share the behavioural and sensory components of smoking whilst delivering negligible levels of nicotine. Although smokers rated VLNCs as less satisfying than regular cigarettes, smokers said they would increase their consumption of VLNCs as the price of regular cigarettes increased, if VLNCs were available at a lower price. This suggests that VLNCs are partially substitutable for regular cigarettes. VLNCs can be part of an effective tobacco control strategy, by reducing nicotine dependence and improving health and financial outcomes for smokers

PRICE TRANSMISSION AND HOUSEHOLDS DEMAND ELASTICITY FOR FROZEN FISH UNDER FUEL SUBSIDY REFORM IN DELTA STATE, NIGERIA

Directory of Open Access Journals (Sweden)

Achoja Felix Odemero

2013-07-01

Full Text Available Fuel subsidy removal is assumed to translate to general increase in the cost of operating business such as fish marketing.The response of price of fish and corresponding demand elasticity are welfare issues worthy of investigation in Nigeria. The present study evaluates price transmission in fish marketing system by analysing the response of fish market indices to fuel subsidy reform in Nigeria. Primary data collected with structured questionnaire from purposively selected 78 frozen fish marketers, were analysed with descriptive statistics and regression model. A test of hypothesis shows a significant price transmission of about 100% (P < 0.05. Marketing cost increased by 31.8% and profitability dropped by 24.20%, confirming negative effect of new price regime. The result further revealed a 0.05% drop in quantity of frozen fish demanded by households. It was recommended that economic measures should be introduced by the government to cushion the effect of fuel policy removal.

When do price thresholds matter in retail categories?

NARCIS (Netherlands)

K.H. Pauwels (Koen); S. Srinivasan (Shuba); Ph.H.B.F. Franses (Philip Hans)

2007-01-01

textabstractMarketing literature has long recognized that brand price elasticity need not be monotonic and symmetric, but has yet to provide generalizable market-level insights on threshold-based price elasticity, asymmetric thresholds, and the sign and magnitude of elasticity transitions. This

Is the Armington Elasticity Really Constant across Importers?

OpenAIRE

Yilmazkuday, Hakan

2009-01-01

This paper shows that the Armington elasticity, which refers to both the elasticity of substitution across goods and the price elasticity of demand under the assumption of a large number of varieties, systematically changes from one importer country to another in an international trade context. Then a natural question to ask is "What determines the Armington elasticity?" The answer comes from the distinction between the elasticity of demand with respect to the destination price (i.e., the Arm...

Economic risk assessment of drought impacts on irrigated agriculture

Science.gov (United States)

Lopez-Nicolas, A.; Pulido-Velazquez, M.; Macian-Sorribes, H.

2017-07-01

In this paper we present an innovative framework for an economic risk analysis of drought impacts on irrigated agriculture. It consists on the integration of three components: stochastic time series modelling for prediction of inflows and future reservoir storages at the beginning of the irrigation season; statistical regression for the evaluation of water deliveries based on projected inflows and storages; and econometric modelling for economic assessment of the production value of agriculture based on irrigation water deliveries and crop prices. Therefore, the effect of the price volatility can be isolated from the losses due to water scarcity in the assessment of the drought impacts. Monte Carlo simulations are applied to generate probability functions of inflows, which are translated into probabilities of storages, deliveries, and finally, production value of agriculture. The framework also allows the assessment of the value of mitigation measures as reduction of economic losses during droughts. The approach was applied to the Jucar river basin, a complex system affected by multiannual severe droughts, with irrigated agriculture as the main consumptive demand. Probability distributions of deliveries and production value were obtained for each irrigation season. In the majority of the irrigation districts, drought causes a significant economic impact. The increase of crop prices can partially offset the losses from the reduction of production due to water scarcity in some districts. Emergency wells contribute to mitigating the droughts' impacts on the Jucar river system.

Regional electric power demand elasticities of Japan's industrial and commercial sectors

International Nuclear Information System (INIS)

Hosoe, Nobuhiro; Akiyama, Shu-ichi

2009-01-01

In the assessment and review of regulatory reforms in the electric power market, price elasticity is one of the most important parameters that characterize the market. However, price elasticity has seldom been estimated in Japan; instead, it has been assumed to be as small as 0.1 or 0 without proper examination of the empirical validity of such a priori assumptions. We estimated the regional power demand functions for nine regions, in order to quantify the elasticity, and found the short-run price elasticity to be 0.09-0.30 and the long-run price elasticity to be 0.12-0.56. Inter-regional comparison of our estimation results suggests that price elasticity in rural regions is larger than that in urban regions. Popular assumptions of small elasticity of 0.1, for example, could be suitable for examining Japan's aggregate power demand but not power demand functions that focus on respective regions. Furthermore, assumptions about smaller elasticity values such as 0.01 and 0 could not be supported statistically by this study.

Consumption and cost of diesel oil on cultivation of Zoysiagrass (Zoysia japonica Steud.) irrigated by aspersion canyons under two irrigation handlings

Energy Technology Data Exchange (ETDEWEB)

Mazaroni, Bruno Henrique Silveira; Turco, Jose Eduardo Pitelli; Coan, Ruchele Marchiori; Gerolineto, Eduardo [Universidade Estadual Paulista (FCAV/UNESP), Jaboticabal, SP (Brazil). Fac. de Ciencias Agrarias e Veterinarias

2008-07-01

This work aim to analyse the consumption and cost of diesel oil on cultivation of zoysiagrass (Zoysia japonica Steud.) irrigated by aspersion canyon, submitted of to two irrigation handling: T1 - irrigated when the tensiometer reading is equal - 0,5 atmospheres and T2 - irrigated by grass growers methodology. The research was carried on Green-Park Farm, in the city of Pitangueiras, SP. Consumption of diesel oil was measured from a diesel engine, brand MWM, turbined with 6 cylinders, type D-229 for zoysiagrass production. The diesel price was gotten from Petroleum National Agency (ANP), being an average price in Sao Paulo State, in February 2007, converted into the commercial dollar. Economical result was studied, subtracting the selling value of the grass, by the cost of the fuel consumed, for both T1 and T2 treatments. The treatment made by tensiometer showed greater diesel consumption, related to treatment T2, where the handling was made by the grass grower. (author)

Water Pricing and Implementation Strategies for the Sustainability of an Irrigation System: A Case Study within the Command Area of the Rakh Branch Canal

Directory of Open Access Journals (Sweden)

Muhammad Uzair Qamar

2018-04-01

Full Text Available The command area of the Rakh branch canal grows wheat, sugarcane, and rice crops in abundance. The canal water, which is trivial for irrigating these crops, is conveyed to the farms through the network of canals and distributaries. For the maintenance of this vast infrastructure; the end users are charged on a seasonal basis. The present water charges are severely criticized for not being adequate to properly manage the entire infrastructure. We use the residual value to determine the value of the irrigation water and then based on the quantity of irrigation water supplied to farm land coupled with the infrastructure maintenance cost, full cost recovery figures are executed for the study area, and policy recommendations are made for the implementation of the full cost recovery system. The approach is unique in the sense that the pricings are based on the actual quantity of water conveyed to the field for irrigating crops. The results of our analysis showed that the canal water is severely under charged in the culturable command area of selected distributaries, thus negating the plan of having a self-sustainable irrigation system.

Impact of electricity prices and volumetric water allocation on energy and groundwater demand management: analysis from Western India

International Nuclear Information System (INIS)

Kumar, M.D.

2005-01-01

In recent years, power tariff policy has been increasingly advocated as a mean to influence groundwater use and withdrawal decisions of farmers in view of the failure of existing direct and indirect regulations on groundwater withdrawal in India. Many researchers argue that pro rata electricity tariff, with built in positive marginal cost of pumping could bring about efficient use of the resource, though some argue that the levels of tariff in which demand becomes elastic to pricing are too high to be viable from political and socio-economic points of view. The paper presents a theoretical model to analyze farmers' response to changes in power tariff and water allocation regimes vis a vis energy and groundwater use. It validates the model by analyzing water productivity in groundwater irrigation under different electricity pricing structures and water allocation regimes. Water productivity was estimated using primary data of gross crop inputs, cost of all inputs, and volumetric water inputs. The analysis shows that unit pricing of electricity influences groundwater use efficiency and productivity positively. It also shows that the levels of pricing at which demand for electricity and groundwater becomes elastic to tariff are socio-economically viable. Further, water productivity impacts of pricing would be highest when water is volumetrically allocated with rationing. Therefore, an effective power tariff policy followed by enforcement of volumetric water allocation could address the issue of efficiency, sustainability and equity in groundwater use in India

Estimating elasticity for residential electricity demand in China.

Science.gov (United States)

Shi, G; Zheng, X; Song, F

2012-01-01

Residential demand for electricity is estimated for China using a unique household level dataset. Household electricity demand is specified as a function of local electricity price, household income, and a number of social-economic variables at household level. We find that the residential demand for electricity responds rather sensitively to its own price in China, which implies that there is significant potential to use the price instrument to conserve electricity consumption. Electricity elasticities across different heterogeneous household groups (e.g., rich versus poor and rural versus urban) are also estimated. The results show that the high income group is more price elastic than the low income group, while rural families are more price elastic than urban families. These results have important policy implications for designing an increasing block tariff.

Demand for natural gas from industries in Brazil: an estimate of the price elasticity, income elasticity and forecast for 2008-2012 using VEC (Vector Error Correction) Model; Demanda por gas natural no Brasil: um estudo sobre as elasticidades preco e renda de longo prazo do segmento industrial e estimativa para o periodo de 2008-2012 usando modelo VEC (Vector Error Correction)

Energy Technology Data Exchange (ETDEWEB)

Cabral, Renata [Universidade de Sao Paulo (USP), SP (Brazil). Faculdade de Economia e Administracao; Parente, Virginia [Universidade de Sao Paulo (USP), SP (Brazil). Inst. de Eletrotecnica e Energia

2008-07-01

The purpose of the present study is to estimate the long-run elasticities - manly price and income - of the demand for gas natural in the industrial category. After determining that the series under study were non-stationary, we chose to use the cointegration approach, estimating a Vector Error Correction Model (VEC Model). The obtained results show that the price elasticity for industrial sector in Brazil is higher than income elasticity. Although both of then is near to one, the price elasticity is higher that one unit while income elasticity is slightly lower. Predictions for the gas natural consumption in Brazil for industrials for 2008-2012 period are also made. (author)

Price Elasticity of Demand and Capacity-Restraint Transit Fare Strategy: A Case Study of Bangkok Mass Transit System

Directory of Open Access Journals (Sweden)

Ackchai Sirikijpanichkul

2015-01-01

Full Text Available Traffic congestion is a chronic problem of Bangkok. Similar to other metropolises, the city perpetually seeks for alternatives to road travel. Mass rapid transit seems to be the only way out that is expected to mitigate traffic congestion in the city. However, without common fare system, travelers need to pay an initial entrance fee every time they enter each transit system. This excess cost tapers the demand and affects the efficient use of the system. This research investigates the influence of fare price on transit use which is measured by price elasticity of demand and proposes the optimum fare price if the common fare is used. The analysis is based on the findings from the stated preference survey techniques. Finally, the conclusion on fare level that encourage more patronage, maintain service quality and operator revenue is addressed.

Effect of the 1973 oil price embargo

International Nuclear Information System (INIS)

Goel, R.K.; Morey, M.J.

1993-01-01

This paper focuses on the effect of the oil shock of 1973 on US gasoline demand by examining the price elasticities of demand before and after the 1973 embargo. Price elasticities provide useful input to the development of public policy dealing with taxation and pollution control. The extensive data used include state level observations for nearly three decades spanning 1952-80. We apply non-parametric regression methods that are more appropriate to our investigation than traditional parametric techniques. Unlike standard regression techniques, non-parametric methods neither assume a functional form for the demand relation nor restrict the distribution of the dependent variable. Our results show that the mean price elasticity of gasoline demand for the USA was - 0.243 for 1952-73 and the corresponding number for 1973-80 was - 0.576, statistically different at the 5% level of significance. The relatively higher price elasticity in the post-embargo period is consistent with the hypothesis that consumers sought substitutes and restricted their consumption in response to prices as well as social responsibility. The policy implications of these results are also discussed. (author)

Study protocol: combining experimental methods, econometrics and simulation modelling to determine price elasticities for studying food taxes and subsidies (The Price ExaM Study).

Science.gov (United States)

Waterlander, Wilma E; Blakely, Tony; Nghiem, Nhung; Cleghorn, Christine L; Eyles, Helen; Genc, Murat; Wilson, Nick; Jiang, Yannan; Swinburn, Boyd; Jacobi, Liana; Michie, Jo; Ni Mhurchu, Cliona

2016-07-19

There is a need for accurate and precise food price elasticities (PE, change in consumer demand in response to change in price) to better inform policy on health-related food taxes and subsidies. The Price Experiment and Modelling (Price ExaM) study aims to: I) derive accurate and precise food PE values; II) quantify the impact of price changes on quantity and quality of discrete food group purchases and; III) model the potential health and disease impacts of a range of food taxes and subsidies. To achieve this, we will use a novel method that includes a randomised Virtual Supermarket experiment and econometric methods. Findings will be applied in simulation models to estimate population health impact (quality-adjusted life-years [QALYs]) using a multi-state life-table model. The study will consist of four sequential steps: 1. We generate 5000 price sets with random price variation for all 1412 Virtual Supermarket food and beverage products. Then we add systematic price variation for foods to simulate five taxes and subsidies: a fruit and vegetable subsidy and taxes on sugar, saturated fat, salt, and sugar-sweetened beverages. 2. Using an experimental design, 1000 adult New Zealand shoppers complete five household grocery shops in the Virtual Supermarket where they are randomly assigned to one of the 5000 price sets each time. 3. Output data (i.e., multiple observations of price configurations and purchased amounts) are used as inputs to econometric models (using Bayesian methods) to estimate accurate PE values. 4. A disease simulation model will be run with the new PE values as inputs to estimate QALYs gained and health costs saved for the five policy interventions. The Price ExaM study has the potential to enhance public health and economic disciplines by introducing internationally novel scientific methods to estimate accurate and precise food PE values. These values will be used to model the potential health and disease impacts of various food pricing policy

Study protocol: combining experimental methods, econometrics and simulation modelling to determine price elasticities for studying food taxes and subsidies (The Price ExaM Study

Directory of Open Access Journals (Sweden)

Wilma E. Waterlander

2016-07-01

Full Text Available Abstract Background There is a need for accurate and precise food price elasticities (PE, change in consumer demand in response to change in price to better inform policy on health-related food taxes and subsidies. Methods/Design The Price Experiment and Modelling (Price ExaM study aims to: I derive accurate and precise food PE values; II quantify the impact of price changes on quantity and quality of discrete food group purchases and; III model the potential health and disease impacts of a range of food taxes and subsidies. To achieve this, we will use a novel method that includes a randomised Virtual Supermarket experiment and econometric methods. Findings will be applied in simulation models to estimate population health impact (quality-adjusted life-years [QALYs] using a multi-state life-table model. The study will consist of four sequential steps: 1. We generate 5000 price sets with random price variation for all 1412 Virtual Supermarket food and beverage products. Then we add systematic price variation for foods to simulate five taxes and subsidies: a fruit and vegetable subsidy and taxes on sugar, saturated fat, salt, and sugar-sweetened beverages. 2. Using an experimental design, 1000 adult New Zealand shoppers complete five household grocery shops in the Virtual Supermarket where they are randomly assigned to one of the 5000 price sets each time. 3. Output data (i.e., multiple observations of price configurations and purchased amounts are used as inputs to econometric models (using Bayesian methods to estimate accurate PE values. 4. A disease simulation model will be run with the new PE values as inputs to estimate QALYs gained and health costs saved for the five policy interventions. Discussion The Price ExaM study has the potential to enhance public health and economic disciplines by introducing internationally novel scientific methods to estimate accurate and precise food PE values. These values will be used to model the potential

Estimating petroleum products demand elasticities in Nigeria. A multivariate cointegration approach

International Nuclear Information System (INIS)

Iwayemi, Akin; Adenikinju, Adeola; Babatunde, M. Adetunji

2010-01-01

This paper formulates and estimates petroleum products demand functions in Nigeria at both aggregative and product level for the period 1977 to 2006 using multivariate cointegration approach. The estimated short and long-run price and income elasticities confirm conventional wisdom that energy consumption responds positively to changes in GDP and negatively to changes in energy price. However, the price and income elasticities of demand varied according to product type. Kerosene and gasoline have relatively high short-run income and price elasticities compared to diesel. Overall, the results show petroleum products to be price and income inelastic. (author)

Estimating petroleum products demand elasticities in Nigeria. A multivariate cointegration approach

Energy Technology Data Exchange (ETDEWEB)

Iwayemi, Akin; Adenikinju, Adeola; Babatunde, M. Adetunji [Department of Economics, University of Ibadan, Ibadan (Nigeria)

2010-01-15

This paper formulates and estimates petroleum products demand functions in Nigeria at both aggregative and product level for the period 1977 to 2006 using multivariate cointegration approach. The estimated short and long-run price and income elasticities confirm conventional wisdom that energy consumption responds positively to changes in GDP and negatively to changes in energy price. However, the price and income elasticities of demand varied according to product type. Kerosene and gasoline have relatively high short-run income and price elasticities compared to diesel. Overall, the results show petroleum products to be price and income inelastic. (author)

Regional electric power demand elasticities of Japan's industrial and commercial sectors

Energy Technology Data Exchange (ETDEWEB)

Hosoe, Nobuhiro [National Graduate Institute for Policy Studies, 7-22-1 Roppongi, Minato, Tokyo 106-8677 (Japan); Akiyama, Shu-ichi [Kushiro Public University of Economics, 4-1-1 Ashino, Kushiro, Hokkaido 085-8585 (Japan)

2009-11-15

In the assessment and review of regulatory reforms in the electric power market, price elasticity is one of the most important parameters that characterize the market. However, price elasticity has seldom been estimated in Japan; instead, it has been assumed to be as small as 0.1 or 0 without proper examination of the empirical validity of such a priori assumptions. We estimated the regional power demand functions for nine regions, in order to quantify the elasticity, and found the short-run price elasticity to be 0.09-0.30 and the long-run price elasticity to be 0.12-0.56. Inter-regional comparison of our estimation results suggests that price elasticity in rural regions is larger than that in urban regions. Popular assumptions of small elasticity of 0.1, for example, could be suitable for examining Japan's aggregate power demand but not power demand functions that focus on respective regions. Furthermore, assumptions about smaller elasticity values such as 0.01 and 0 could not be supported statistically by this study. (author)

Using non-time-series to determine supply elasticity: how far do prices change the Hubbert curve?

International Nuclear Information System (INIS)

Reynolds, D.B.

2002-01-01

An important concern of OPEC's work is to be able to understand how much supply of oil exists in different countries, in order to help better conserve oil. This paper extends M. King Hubbert's oil production and discovery forecasting model (Hubbert, 1962), using a non-time-series cumulative discovery and production quadratic Hubbert curve and structural shift variables to model technology and regulation changes. The model can be used to determine better world oil supplies. Price is tested, to see how powerful it is for increasing or decreasing oil supply. Using a trend of cumulative production, instead of time, will help to better fix the supply elasticity with respect to price, which is shown to be very inelastic. An interesting question is whether cumulative discovery or production constitutes an I(2) variable. This paper explains that they are not I(2) variables. (Author)

Health care demand elasticities by type of service.

Science.gov (United States)

Ellis, Randall P; Martins, Bruno; Zhu, Wenjia

2017-09-01

We estimate within-year price elasticities of demand for detailed health care services using an instrumental variable strategy, in which individual monthly cost shares are instrumented by employer-year-plan-month average cost shares. A specification using backward myopic prices gives more plausible and stable results than using forward myopic prices. Using 171 million person-months spanning 73 employers from 2008 to 2014, we estimate that the overall demand elasticity by backward myopic consumers is -0.44, with higher elasticities of demand for pharmaceuticals (-0.44), specialists visits (-0.32), MRIs (-0.29) and mental health/substance abuse (-0.26), and lower elasticities for prevention visits (-0.02) and emergency rooms (-0.04). Demand response is lower for children, in larger firms, among hourly waged employees, and for sicker people. Overall the method appears promising for estimating elasticities for highly disaggregated services although the approach does not work well on services that are very expensive or persistent. Copyright © 2017 Elsevier B.V. All rights reserved.

Modelling energy and non-energy substitution: A brief survey of elasticities

International Nuclear Information System (INIS)

Frondel, Manuel

2011-01-01

Estimating the degree of substitution between energy and non-energy inputs is the key for any evaluation of environmental and energy policies. Yet, given the variety of substitution elasticities, the central question arises as to which measure would be most appropriate. Apparently, Allen's elasticities of substitution have been the most-used measures in applied production analysis. In line with , this paper argues that cross-price elasticities are preferable for many practical purposes. This conclusion is based on a survey of classical substitution measures, such as those from Allen, Morishima, and McFadden. The survey highlights the fact that cross-price elasticities are their essential ingredients. - Highlights: → Given the large variety of substitution elasticities, the central question arises as to which measure would be most appropriate. Apparently, Allen's elasticities of substitution have been the most-used measures in applied production analysis. → In line with , this paper argues that cross-price elasticities are preferable for many practical purposes. → This conclusion is based on a survey of classical substitution measures, such as those from Allen, Morishima, and McFadden. → The survey also highlights the fact that cross-price elasticities are their essential ingredients.

Price Analysis of Railway Freight Transport under Marketing Mechanism

Science.gov (United States)

Shi, Ying; Fang, Xiaoping; Chen, Zhiya

Regarding the problems in the reform of the railway tariff system and the pricing of the transport, by means of assaying the influence of the price elasticity on the artifice used for price, this article proposed multiple regressive model which analyzed price elasticity quantitatively. This model conclude multi-factors which influences on the price elasticity, such as the averagely railway freight charge, the averagely freight haulage of proximate supersede transportation mode, the GDP per capita in the point of origin, and a series of dummy variable which can reflect the features of some productive and consume demesne. It can calculate the price elasticity of different classes in different domains, and predict the freight traffic volume on different rate levels. It can calculate confidence-level, and evaluate the relevance of each parameter to get rid of irrelevant or little relevant variables. It supplied a good theoretical basis for directing the pricing of transport enterprises in market economic conditions, which is suitable for railway freight, passenger traffic and other transportation manner as well. SPSS (Statistical Package for the Social Science) software was used to calculate and analysis the example. This article realized the calculation by HYFX system(Ministry of Railways fund).

Invester Response to Consumer Elasticity, Nordic Energy Research

DEFF Research Database (Denmark)

Jensen, Stine Grenaa; Meibom, Peter; Ravn, Hans V.

2004-01-01

. The simulated investment decisions are taken in a stochastic, dynamic setting, where a key point is the timing of the investment decision in relation to the gathering of new information relative to the stochastic elements. Based on this, the consequences of the development in consumer price elasticity......, and it is generally assumed that the demand side has an important role in this, and increasingly so. However, since consumers have not earlier had the incentive to respond to electricity prices, no reliable estimate of demand elasticity is known. The purpose of the present study is to analyse the role of electricity...... demand elasticity for investments in new electricity production capacity. Electricity price scenarios generated with a partial equilibrium model (Balmorel) are combined with a model of investment decisions. In this, various scenarios concerning the development in the demand elasticity are used...

Elasticity of Substitution and Antidumping Measures

DEFF Research Database (Denmark)

Drud Hansen, Jørgen; Meinen, Philipp; Nielsen, Jørgen Ulff-Møller

Abstract This paper analyzes the role of the elasticity of substitution for anti-dumping decisions across countries. In monopolistic competition models with cost heterogeneous firms across countries, price differences vary inversely with the elasticity of substitution. Anti-dumping duties should...... therefore also vary inversely with the elasticity of substitution at least for countries which have a strong focus on prices in the determination of their anti-dumping measures. We test this for ten countries from 1990 to 2009 using data on anti-dumping from Chad Bown (2010) and US-data at 8-digit level...... in our empirical investigation support the predicted role of the elasticity of substitution as we find a significant negative relation between the elasticity of substitution and the final anti-dumping duties for the ‘lesser duty rule’ group of countries. The countries which do not follow the ‘lesser duty...

Fuel consumption: short term and long term price impacts per population type

International Nuclear Information System (INIS)

2011-01-01

This report presents assessments of the price sensitivity of household fuel consumption. After a literature review on price-elasticity assessments and the use of pseudo-panels, the investigation analyses the deciding factors of the household fuel expense and its evolution between 1985 and 2006. It proposes a short term price-elasticity assessment based on the most recent survey, and also proposes price-elasticity assessments for sub-populations, notably in terms of income level or location (rural or urban areas)

The Morishima Gross elasticity of substitution

OpenAIRE

Blackorby, Charles; Primont, Daniel; Russell, R. Robert

2007-01-01

We show that the Hotelling-Lau elasticity of substitution, an extension of the Allen-Uzawa elasticity to allow for optimal output-quantity (or utility) responses to changes in factor prices, inherits all of the failings of the Allen-Uzawa elasticity identified by Blackorby and Russell [1989 AER]. An analogous extension of the Morishima elasticity of substitution to allow for output quantity changes preserves the salient properties of the original Hicksian notion of elasticity of substitution.

The effects of the energy price reform on households consumption in Iran

International Nuclear Information System (INIS)

Moshiri, Saeed

2015-01-01

The substantial subsidizing of energy prices over the years has led to high energy consumption, inefficiencies, fiscal pressures, and environmental problems in Iran. To address the increasing socio-economic problems associated with the energy subsidies, the government embarked on an aggressive energy price reform through which energy subsidies were removed and cash handouts were given to all households in 2010. In this paper, I analyze the effectiveness of the energy price reform in Iran by estimating energy demand elasticities for households in different income groups. I apply a two-stage consumer optimization model and estimate the system of energy expenditures shares using the household budget survey data for the period 2001–2008. The results show that the overall price elasticities of demand are small, but income elasticities are close to one. The results also indicate heterogeneous responses to energy price and income changes in different income groups. Specifically, the urban households show stronger response to price changes, but rural households, particularly mid-income households, to income changes. These findings suggest that the current policy of price increases would not solely be able to reduce energy consumption and, therefore, it should be geared towards increasing energy efficiency through a series of price and non-price measures. - Highlights: • The effectiveness of the recent energy price reform in Iran is analyzed. • Energy demand elasticities for households in different income groups are estimated. • A two-stage optimization model was applied to estimate the system of equations using micro-data for 2001–2008. • The price elasticities are small and income elasticities rather large, but responses are heterogeneous. • A price and non-price reform policy package is needed for different income groups and regions

Demand assessment and price-elasticity estimation of quality-improved primary health care in Palestine: a contribution from the contingent valuation method.

Science.gov (United States)

Mataria, Awad; Luchini, Stéphane; Daoud, Yousef; Moatti, Jean-Paul

2007-10-01

This paper proposes a new methodology to assess demand and price-elasticity for health care, based on patients' stated willingness to pay (WTP) values for certain aspects of health care quality improvements. A conceptual analysis of how respondents consider contingent valuation (CV) questions allowed us to specify a probability density function of stated WTP values, and consequently, to model a demand function for quality-improved health care, using a parametric survival approach. The model was empirically estimated using a CV study intended to assess patients' values for improving the quality of primary health care (PHC) services in Palestine. A random sample of 499 individuals was interviewed following medical consultation in four PHC centers. Quality was assessed using a multi-attribute approach; and respondents valued seven specific quality improvements using a decomposed valuation scenario and a payment card elicitation technique. Our results suggest an inelastic demand at low user fees levels, and when the price-increase is accompanied with substantial quality-improvements. Nevertheless, demand becomes more and more elastic if user fees continue to rise. On the other hand, patients' reactions to price-increase turn out to depend on their level of income. Our results can be used to design successful health care financing strategies that include a consideration of patients' preferences and financial capacities. John Wiley & Sons, Ltd.

Yield loss and economic thresholds of yellow nutsedge in irrigated rice as a function of the onset of flood irrigation

Directory of Open Access Journals (Sweden)

Nixon da Rosa Westendorff

2014-03-01

Full Text Available Yellow nutsedge (Cyperus esculentus is adapted to flooding and reduces yield in irrigated rice. Information on the competitive ability of this weed with the crop and the size of the economic damage caused is lacking. Mathematical models quantify the damage to crops and support control decision-making. This study aimed to determine yield losses and economic thresholds (ET of this weed in the culture according to weed population and time of onset of irrigation of the crop. The field study was conducted in the agricultural year of 2010/2011 in Pelotas/RS to evaluate the competitive ability of BRS Querência in competition with different population levels of yellow nutsedge and two periods of onset of flood irrigation (14 and 21 days after emergence. The hyperbolic model satisfactorily estimated yield losses caused by yellow nutsedge. Population of yellow nutsedge was the variable most fitted to the model. The delay of seven days for the beginning of rice irrigation causes decrease in competitive ability of BRS Querência, and based on the ET calculated to the price paid for rice, it is necessary between two and thirteen plants m-2 weed to justify the control in the first and second period of irrigation, respectively. Increases in yield, price paid for rice and control efficiency of the herbicide, besides reduction of costs of controlling promote reduction of ET of yellow nutsedge in rice crops, justifying the adoption of control measures even at smaller weed population.

Asymmetric adaptations to energy price changes

International Nuclear Information System (INIS)

Kuper, G.H.; Van Soest, D.P.

1999-01-01

The effectiveness of policies to reduce the use of energy depend on the elasticity of substitution between the various inputs and on the rate of technological progress. This paper presents a theoretical model emphasising energy investment characteristics of uncertainty and irreversibility that result in testable hypotheses concerning the relative values of substitution parameters and rates of technological change in periods of high and increasing energy prices and in periods of low prices. Estimation results for a panel of sectors of the Dutch economy show that the elasticity of substitution between energy and other inputs is low in periods of low energy prices, whereas it is significantly higher in the preceding period of high and increasing energy prices. Furthermore, energy-saving technological progress in periods of high and increasing energy prices is also significantly higher than if energy prices are low and falling. The regression results suggest that, due this asymmetric response of firms to changes in energy prices, taxing energy in the current period of low energy prices will not yield substantial reductions in energy use of Dutch industry. 21 refs

Weight-based pricing in the collection of household waste. The Oostzaan case

International Nuclear Information System (INIS)

Linderhof, Vincent; Kooreman, Peter; Allers, Maarten; Wiersma, Doede

2001-01-01

This paper provides an empirical analysis of the effects of weight-based pricing in the collection of household waste. Using a comprehensive panel data set on all households in a Dutch municipality we estimate short-run as well as long-run price effects for the amounts of both compostable and non-recyclable household waste. We find significant and sizeable price effects, with the elasticity for compostable waste being four times as large as the elasticity for non-recyclable waste. Long-run elasticities are about 30% larger than short-run elasticities

Profitability of Irrigated Improved Pecan Orchards in the Southern Plains

OpenAIRE

Springer, Job D.; Swinford, Wyatt; Rohla, Charles

2011-01-01

The objective was to determine if an irrigated improved pecan orchard is economical relative to agronomic systems commonly implemented by producers that have access to irrigation. Results show that the improved pecan orchard is more profitable than competitive enterprises after a twenty year time frame, but is sensitive to pecan price, pecan yield and attitude toward risk.

How Does Pricing of Day-ahead Electricity Market Affect Put Option Pricing?

Directory of Open Access Journals (Sweden)

H. Raouf Sheybani

2016-09-01

Full Text Available In this paper, impacts of day-ahead market pricing on behavior of producers and consumers in option and day-ahead markets and on option pricing are studied. To this end, two comprehensive equilibrium models for joint put option and day-ahead markets under pay-as-bid and uniform pricing in day-ahead market are presented, respectively. Interaction between put option and day-ahead markets, uncertainty in fuel price, day-ahead market pricing, and elasticity of consumers to strike price, premium price, and day-ahead price are taken into account in these models. By applying the presented models to a test system impact of day-ahead market pricing on equilibrium of joint put option and day-ahead markets are studied.

Pricing of electricity in Indonesia

International Nuclear Information System (INIS)

Amarullah, M.

1983-01-01

The objectives of this study are 1) to establish a sound theoretical basis for the determinants of electricity demand in Indonesia, 2) to measure the welfare losses of existing electricity pricing, and 3) to suggest a method of reducing these welfare losses. An econometric model for electricity demand is estimated using pooled time-series of fifteen regions in Indonesia covering the period 1970-1979. The short run price elasticities for both residential and industrial/business sectors are found to be inelastic, while the long run price elasticities for these sectors are found to be quite elastic with a value of -.61 for the residential sector and of -1.1 for the industrial/business sector. Income elasticity is .8 in the short run and around 1.00 for the long run. The exposure variable that captures the accessibility of electricity, has long run elasticity of 1.00 for the residential sector and less than 1.00 for the industrial/business sector. Due to distributional considerations, the 1980's electricity rate was set below its efficient level, and has created a welfare loss of Rp.8273.23 million per month. This accounts for 36.03% of the monthly electricity revenue. A rebate mechanism is recommended in this study, which provides a way to mitigate conflicting aspects of efficiency and equity

A review of sustainable solar irrigation systems for Sub-Saharan Africa

OpenAIRE

Mohammed Wazed, S.; Hughes, B.R.; O’Connor, D.; Kaiser Calautit, J.

2018-01-01

This investigation focused on the research undertaken on solar photovoltaic (PV) and solar thermal technologies for pumping water generally for irrigation of remote rural farms specifically considering the Sub-Saharan African region. Solar PV systems have been researched extensively for irrigation purposes due to the rise in Oil prices and the upscaling in commercialisation of PV technology. Based on the literature the most effective PV system is presented for the irrigation of a small scare ...

On the demand for prescription drugs: heterogeneity in price responses.

Science.gov (United States)

Skipper, Niels

2013-07-01

This paper estimates the price elasticity of demand for prescription drugs using an exogenous shift in consumer co-payment caused by a reform in the Danish subsidy scheme for the general public. Using purchasing records for the entire Danish population, I show that the average price response for the most commonly used drug yields demand elasticities in the range of -0.36 to -0.5. The reform is shown to affect women, the elderly, and immigrants the most. Furthermore, this paper shows significant heterogeneity in the price response over different types of antibiotics, suggesting that the price elasticity of demand varies considerably even across relatively similar drugs. Copyright © 2012 John Wiley & Sons, Ltd.

Short-Run and Long-Run Elasticities of Diesel Demand in Korea

Directory of Open Access Journals (Sweden)

Seung-Hoon Yoo

2012-11-01

Full Text Available This paper investigates the demand function for diesel in Korea covering the period 1986–2011. The short-run and long-run elasticities of diesel demand with respect to price and income are empirically examined using a co-integration and error-correction model. The short-run and long-run price elasticities are estimated to be −0.357 and −0.547, respectively. The short-run and long-run income elasticities are computed to be 1.589 and 1.478, respectively. Thus, diesel demand is relatively inelastic to price change and elastic to income change in both the short-run and long-run. Therefore, a demand-side management through raising the price of diesel will be ineffective and tightening the regulation of using diesel more efficiently appears to be more effective in Korea. The demand for diesel is expected to continuously increase as the economy grows.

Can price get the monkey off our back? A meta-analysis of illicit drug demand.

Science.gov (United States)

Gallet, Craig A

2014-01-01

Because of the increased availability of price data over the past 15 years, several studies have estimated the demand for illicit drugs, providing 462 estimates of the price elasticity. Results from estimating several meta-regressions reveal that these price elasticity estimates are influenced by a number of study characteristics. For instance, the price elasticity differs across drugs, with its absolute value being smallest for marijuana, compared with cocaine and heroin. Furthermore, price elasticity estimates are sensitive to whether demand is modeled in the short-run or the long-run, measures of quantity and price, whether or not alcohol and other illicit drugs are included in the specification of demand, and the location of demand. However, a number of other factors, including the functional form of demand, several specification issues, the type of data and method used to estimate demand, and the quality of the publication outlet, have less influence on the price elasticity. Copyright © 2013 John Wiley & Sons, Ltd.

The impacts of energy prices on energy intensity: Evidence from China

International Nuclear Information System (INIS)

Hang, Leiming; Tu, Meizeng

2007-01-01

In this paper, we present a review of the deregulation of energy prices in China between 1985 and 2004 and assess the impacts of changes in energy prices on aggregate energy intensity and coal/oil/electricity intensity. We used time series data to provide estimates of energy price elasticities. Empirical results showed that: (1) The own-price elasticities of coal, oil, and aggregate energy were negative in periods both before and after 1995, implying that higher relative prices of different energy types lead to the decrease in coal, oil, and aggregate energy intensities. However, the positive own-price elasticity of electricity after 1995 probably indicates that the price effect was weaker than other factors such as income effect and population effect. (2) The impacts of energy prices were asymmetric over time. (3) Sectoral adjustment also drove the decrease in aggregate energy intensity. Although raising energy prices to boost efficiency of energy use seems to be an effective policy tool, other policy implications concerned with energy prices, such as energy supply security and fuel poverty, must also be considered

New estimates of elasticity of demand for healthcare in rural China.

Science.gov (United States)

Zhou, Zhongliang; Su, Yanfang; Gao, Jianmin; Xu, Ling; Zhang, Yaoguang

2011-12-01

Only limited empirical studies reported own-price elasticity of demand for health care in rural China. Neither research on income elasticity of demand for health care nor cross-price elasticity of demand for inpatient versus outpatient services in rural China has been reported. However, elasticity of demand is informative to evaluate current policy and to guide further policy making. Our study contributes to the literature by estimating three elasticities (i.e., own-price elasticity, cross-price elasticity, and income elasticity of demand for health care based on nationwide-representative data. We aim to answer three empirical questions with regard to health expenditure in rural China: (1) Which service is more sensitive to price change, outpatient or inpatient service? (2) Is outpatient service a substitute or complement to inpatient service? and (3) Does demand for inpatient services grow faster than demand for outpatient services with income growth? Based on data from a National Health Services Survey, a Probit regression model with probability of outpatient visit and probability of inpatient visit as dependent variables and a zero-truncated negative binomial regression model with outpatient visits as dependent variable were constructed to isolate the effects of price and income on demand for health care. Both pooled and separated regressions for 2003 and 2008 were conducted with tests of robustness. Own-price elasticities of demand for first outpatient visit, outpatient visits among users and first inpatient visit are -0.519 [95% confidence interval (-0.703, -0.336)], -0.547 [95% confidence interval (-0.747, -0.347)] and -0.372 [95% confidence interval (-0.517, -0.226)], respectively. Cross-price elasticities of demand for first outpatient visit, outpatient visits among users and first inpatient visit are 0.073 [95% confidence interval (-0.176, 0.322)], 0.308 [95% confidence interval (0.087, 0.528)], and 0.059 [95% confidence interval (-0.085, 0

Estimation of demand response to energy price signals in energy consumption behaviour in Beijing, China

International Nuclear Information System (INIS)

He, Y.X.; Liu, Y.Y.; Xia, T.; Zhou, B.

2014-01-01

Highlights: • Demand response to energy price signals in energy consumption in Beijing is studied. • The electricity price is of great importance to Beijing’s energy market stability. • Industrial sectors have a large electricity self-elasticity and cross-elasticity. • When consuming electricity, customers pay more attention to natural gas price. • Analysis of demand response to energy price can provide guidance to energy policies. - Abstract: The energy price system in Beijing has not fully exploited customers’ price elasticity, and has a negative impact on achieving the goals of energy saving. This paper analyses the response behaviours of different customers to typical energy prices. As for electricity self-elasticity, the range of the primary, secondary, tertiary industry and residents are −0.026 to −0.033, −0.045 to −0.059, −0.035 to −0.047 and −0.024 to −0.032, respectively. As regards self-elasticity on coal, the range of the primary, secondary, tertiary industry and residents are −0.030 to −0.037, −0.066 to −0.093, −0.055 to −0.072 and −0.034 to −0.051, respectively. The self-elasticities on oil and natural gas are very weak. As for cross-elasticity, when consuming electricity and oil, customers mainly focus on the prices of natural gas, which are 0.185 and 0.112. When consuming coal and natural gas, customers are concerned about the electricity prices, and their cross-elasticities are 0.03 and 0.36, respectively. The estimation of demand response to energy price signals in energy consumption behaviours can provide a decision support for formulating rational energy price policies

Farmers’ willingness to pay for surface water in the West Mitidja irrigated perimeter, northern Algeria

International Nuclear Information System (INIS)

Azzi, M.; Calatrava, J.; Bedrani, S.

2018-01-01

Algeria is among the most water-stressed countries in the world. Because of its climatic conditions, irrigation is essential for agricultural production. Water prices paid by farmers in public irrigation districts are very low and do not cover the operation and maintenance (O&M) costs of the irrigated perimeters, thus leading to the deterioration of these infrastructures. The objective of this paper is to analyse whether farmer’s in the West Mitidja irrigation district in northern Algeria would be willing to pay more for surface water in order to maintain the water supply service in its current conditions. We estimated farmers’ willingness to pay (WTP) for water using data from a dichotomous choice contingent valuation survey to 112 randomly selected farmers. Farmers’ responses were modelled using logistic regression techniques. We also analysed which technical, structural, social and economic characteristics of farms and farmers explain the differences in WTP. Our results showed that nearly 80% of the surveyed farmers are willing to pay an extra price for irrigation water. The average WTP was 64% greater than the price currently paid by farmers, suggesting some scope for improving the financial resources of the Mitidja irrigated perimeter, but insufficient to cover all O&M costs. Some of the key identified factors that affect WTP for surface water relate to farm ownership, access to groundwater resources, cropping patterns, farmers’ agricultural training and risk exposure.

Budget Constraints Affect Male Rats' Choices between Differently Priced Commodities.

Science.gov (United States)

van Wingerden, Marijn; Marx, Christine; Kalenscher, Tobias

2015-01-01

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 consumers, as demand theory predicts different elasticities for both conditions. However, in these studies, demand elasticity was only evaluated over the entirety of choices made from a budget. As compensating budgets changes the number of attainable commodities relative to uncompensated conditions, and thus the number of choices, it remained unclear whether budget compensation has a trivial effect on demand elasticity by simply sampling from a different total number of choices or has a direct effect on consumers' sequential choice structure. If the budget context independently changes choices between commodities over and above price effects, this should become apparent when demand elasticity is assessed over choice sets of any reasonable size that are matched in choice opportunities between budget conditions. To gain more detailed insight in the sequential choice dynamics underlying differences in demand elasticity between budget conditions, we trained N=8 rat consumers to spend a daily budget by making a number of nosepokes to obtain two liquid commodities under different price regimes, in sessions with and without budget compensation. We confirmed that demand elasticity for both commodities differed between compensated and uncompensated budget conditions, also when the number of choices considered was matched, and showed that these elasticity differences emerge early in the sessions. These differences in demand elasticity were driven by a higher choice rate and an increased reselection bias for the preferred commodity in compensated compared to uncompensated budget conditions

Budget Constraints Affect Male Rats’ Choices between Differently Priced Commodities

Science.gov (United States)

Kalenscher, Tobias

2015-01-01

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 consumers, as demand theory predicts different elasticities for both conditions. However, in these studies, demand elasticity was only evaluated over the entirety of choices made from a budget. As compensating budgets changes the number of attainable commodities relative to uncompensated conditions, and thus the number of choices, it remained unclear whether budget compensation has a trivial effect on demand elasticity by simply sampling from a different total number of choices or has a direct effect on consumers’ sequential choice structure. If the budget context independently changes choices between commodities over and above price effects, this should become apparent when demand elasticity is assessed over choice sets of any reasonable size that are matched in choice opportunities between budget conditions. To gain more detailed insight in the sequential choice dynamics underlying differences in demand elasticity between budget conditions, we trained N=8 rat consumers to spend a daily budget by making a number of nosepokes to obtain two liquid commodities under different price regimes, in sessions with and without budget compensation. We confirmed that demand elasticity for both commodities differed between compensated and uncompensated budget conditions, also when the number of choices considered was matched, and showed that these elasticity differences emerge early in the sessions. These differences in demand elasticity were driven by a higher choice rate and an increased reselection bias for the preferred commodity in compensated compared to uncompensated budget

Price-elastic demand in deregulated electricity markets

OpenAIRE

Siddiqui, Afzal S.

2003-01-01

The degree to which any deregulated market functions efficiently often depends on the ability of market agents to respond quickly to fluctuating conditions. Many restructured electricity markets, however, experience high prices caused by supply shortages and little demand-side response. We examine the implications for market operations when a risk-averse retailer's end-use consumers are allowed to perceive real-time variations in the electricity spot price. Using a market-equilibrium mo...

Competition and the Reference Pricing Scheme for pharmaceuticals.

Science.gov (United States)

Ghislandi, Simone

2011-12-01

By introducing n (>1) firms with infinite cross-price elasticity (i.e. generic drugs), we explore the effects of competition on the optimal pricing strategies under a Reference Pricing Scheme (RPS). A two-stage model repeated infinite number of times is presented. When stage 1 is competitive, the equilibrium in pure strategies exists and is efficient only if the reference price (R) does not depend on the price of the branded product. When generics collude, the way R is designed is crucial for both the stability of the cartel among generics and the collusive prices in equilibrium. An optimally designed RPS must set R as a function only of the infinitely elastic side of the market and should provide the right incentives for competition. Copyright © 2011 Elsevier B.V. All rights reserved.

Price and expenditure elasticities of residential energy demand during urbanization: An empirical analysis based on the household-level survey data in China

International Nuclear Information System (INIS)

Sun, Chuanwang; Ouyang, Xiaoling

2016-01-01

Urbanization, one of the most obvious characteristics of economic growth in China, has an apparent “lock-in effect” on residential energy consumption pattern. It is expected that residential sector would become a major force that drives China's energy consumption after urbanization process. We estimate price and expenditure elasticities of residential energy demand using data from China's Residential Energy Consumption Survey (CRECS) that covers households at different income levels and from different regional and social groups. Empirical results from the Almost Ideal Demand System model are in accordance with the basic expectations: the demands for electricity, natural gas and transport fuels are inelastic in the residential sector due to the unreasonable pricing mechanism. We further investigate the sensitivities of different income groups to prices of the three types of energy. Policy simulations indicate that rationalizing energy pricing mechanism is an important guarantee for energy sustainable development during urbanization. Finally, we put forward suggestions on energy pricing reform in the residential sector based on characteristics of China's undergoing urbanization process and the current energy consumption situations.

Oil prices and the U.S. business cycle

International Nuclear Information System (INIS)

Lescaroux, F.

2006-06-01

The recent surge in oil prices rakes up old fears and the spectre of stagflation hangs over worldwide economic growth's forecasts. After 30 years of research however analysts still disagree about the influence of oil prices on macro-economic variations and the estimations of the consequences of a costlier barrel differ. As to the United States for example, elasticities between real GDP and oil price form a wide spectrum stretching from a value close to -1% to -11,6%. In this context, we try to identify the potential sources of instability in the oil price-macro-economy relationship in order to explain the width of this range. First we draw attention to the distinction between the effects of an upward disequilibrium and of an upturn in the equilibrium in the oil price series. This distinction lets us share the range of published results in two parts: the elasticities of real American GDP with respect to an upward imbalance and with respect to a rise in the equilibrium price would lie approximately in the ranges extending, respectively, from -1% to -5,5% and from -5% to -11,6%. We direct our work towards the analysis of the consequences of short-run variations in the oil prices on the U.S. business cycle. We identify a set of influences which condition the vulnerability of an economy and then construct an econometric sectoral and non-linear model inspired from Marshall's theory. The simulations conducted let us explain the long-run weakening in the oil price-macro-economy relationship and highlight the prominent part played by imported inflation and monetary policy in the crisis of the 70's and 80's. According to the values of the structural factors in the model and to the shape of the oil price short-run disequilibrium, the elasticities evaluated cover the whole range of published elasticities. (author)

Price elasticity of demand: An overlooked concept

International Nuclear Information System (INIS)

Anon.

1995-01-01

An all-too-common mistake in analyzing the uranium market is to assume that demand for uranium is driven only by the design and operational parameters of nuclear power plants. Because it is generally accepted that demand for uranium is inelastic, not much attention has been given to how prices can indirectly affect demand. The purpose of this paper is to highlight the factors that are most sensitive to uranium prices, and to show how they alter uranium demand

Farmers’ willingness to pay for surface water in the West Mitidja irrigated perimeter, northern Algeria

Directory of Open Access Journals (Sweden)

Malika Azzi

2018-04-01

Full Text Available Algeria is among the most water-stressed countries in the world. Because of its climatic conditions, irrigation is essential for agricultural production. Water prices paid by farmers in public irrigation districts are very low and do not cover the operation and maintenance (O&M costs of the irrigated perimeters, thus leading to the deterioration of these infrastructures. The objective of this paper is to analyse whether farmer’s in the West Mitidja irrigation district in northern Algeria would be willing to pay more for surface water in order to maintain the water supply service in its current conditions. We estimated farmers’ willingness to pay (WTP for water using data from a dichotomous choice contingent valuation survey to 112 randomly selected farmers. Farmers’ responses were modelled using logistic regression techniques. We also analysed which technical, structural, social and economic characteristics of farms and farmers explain the differences in WTP. Our results showed that nearly 80% of the surveyed farmers are willing to pay an extra price for irrigation water. The average WTP was 64% greater than the price currently paid by farmers, suggesting some scope for improving the financial resources of the Mitidja irrigated perimeter, but insufficient to cover all O&M costs. Some of the key identified factors that affect WTP for surface water relate to farm ownership, access to groundwater resources, cropping patterns, farmers’ agricultural training and risk exposure.

75 FR 34074 - Postal Pricing Methods

Science.gov (United States)

2010-06-16

... Methods AGENCY: Postal Regulatory Commission. ACTION: Notice of proposed rulemaking. SUMMARY: The... price sensitivity (elasticity) to volumes actually mailed during the rebate program. This method is... indicated by the market elasticity. Mitchell Comments at 4-6. Postal Service method. In its data collection...

Tiered co-payments, pricing, and demand in reference price markets for pharmaceuticals.

Science.gov (United States)

Herr, Annika; Suppliet, Moritz

2017-12-01

Health insurance companies curb price-insensitive behavior and the moral hazard of insureds by means of cost-sharing, such as tiered co-payments or reference pricing in drug markets. This paper evaluates the effect of price limits - below which drugs are exempt from co-payments - on prices and on demand. First, using a difference-in-differences estimation strategy, we find that the new policy decreases prices by 5 percent for generics and increases prices by 4 percent for brand-name drugs in the German reference price market. Second, estimating a nested-logit demand model, we show that consumers appreciate co-payment exempt drugs and calculate lower price elasticities for brand-name drugs than for generics. This explains the different price responses of brand-name and generic drugs and shows that price-related co-payment tiers are an effective tool to steer demand to low-priced drugs. Copyright © 2017 Elsevier B.V. All rights reserved.

The Connection Between House Price Appreciation and Property Tax Revenues*

OpenAIRE

Lutz, Byron F.

2008-01-01

This paper explores two aspects of the connection between property tax revenues and house prices. First, I estimate the elasticity of property tax revenues with respect to house prices. This elasticity does not necessarily equal one as governments may adjust effective tax rates to offset changes in property values. Second, I examine the timing of the relationship. Institutional features of the property tax make it unlikely that changes in house prices will immediately influence tax revenues. ...

Price Sensitivity of Demand for Prescription Drugs

DEFF Research Database (Denmark)

Simonsen, Marianne; Skipper, Lars; Skipper, Niels

2016-01-01

We investigate price sensitivity of demand for prescription drugs, using drug purchase records for the entire Danish population. We identify price responsiveness by exploiting variation in prices caused by kinked reimbursement schemes and implement a regression kink design. The results suggest some...... price responsiveness with corresponding price elasticities ranging from −0.2 to −0.7. Individuals with chronic disease and especially individuals above the age of 65 respond less to the price of drugs....

Response of residential electricity demand to price: The effect of measurement error

Energy Technology Data Exchange (ETDEWEB)

Alberini, Anna [Department of Agricultural Economics, University of Maryland (United States); Centre for Energy Policy and Economics (CEPE), ETH Zurich (Switzerland); Gibson Institute and Institute for a Sustainable World, School of Biological Sciences, Queen' s University Belfast, Northern Ireland (United Kingdom); Filippini, Massimo, E-mail: mfilippini@ethz.ch [Centre for Energy Policy and Economics (CEPE), ETH Zurich (Switzerland); Department of Economics, University of Lugano (Switzerland)

2011-09-15

In this paper we present an empirical analysis of the residential demand for electricity using annual aggregate data at the state level for 48 US states from 1995 to 2007. Earlier literature has examined residential energy consumption at the state level using annual or monthly data, focusing on the variation in price elasticities of demand across states or regions, but has failed to recognize or address two major issues. The first is that, when fitting dynamic panel models, the lagged consumption term in the right-hand side of the demand equation is endogenous. This has resulted in potentially inconsistent estimates of the long-run price elasticity of demand. The second is that energy price is likely mismeasured. To address these issues, we estimate a dynamic partial adjustment model using the Kiviet corrected Least Square Dummy Variables (LSDV) (1995) and the Blundell-Bond (1998) estimators. We find that the long-term elasticities produced by the Blundell-Bond system GMM methods are largest, and that from the bias-corrected LSDV are greater than that from the conventional LSDV. From an energy policy point of view, the results obtained using the Blundell-Bond estimator where we instrument for price imply that a carbon tax or other price-based policy may be effective in discouraging residential electricity consumption and hence curbing greenhouse gas emissions in an electricity system mainly based on coal and gas power plants. - Research Highlights: > Updated information on price elasticities for the US energy policy. > Taking into account measurement error in the price variable increase price elasticity. > Room for discouraging residential electricity consumption using price increases.

Response of residential electricity demand to price: The effect of measurement error

International Nuclear Information System (INIS)

Alberini, Anna; Filippini, Massimo

2011-01-01

In this paper we present an empirical analysis of the residential demand for electricity using annual aggregate data at the state level for 48 US states from 1995 to 2007. Earlier literature has examined residential energy consumption at the state level using annual or monthly data, focusing on the variation in price elasticities of demand across states or regions, but has failed to recognize or address two major issues. The first is that, when fitting dynamic panel models, the lagged consumption term in the right-hand side of the demand equation is endogenous. This has resulted in potentially inconsistent estimates of the long-run price elasticity of demand. The second is that energy price is likely mismeasured. To address these issues, we estimate a dynamic partial adjustment model using the Kiviet corrected Least Square Dummy Variables (LSDV) (1995) and the Blundell-Bond (1998) estimators. We find that the long-term elasticities produced by the Blundell-Bond system GMM methods are largest, and that from the bias-corrected LSDV are greater than that from the conventional LSDV. From an energy policy point of view, the results obtained using the Blundell-Bond estimator where we instrument for price imply that a carbon tax or other price-based policy may be effective in discouraging residential electricity consumption and hence curbing greenhouse gas emissions in an electricity system mainly based on coal and gas power plants. - Research Highlights: → Updated information on price elasticities for the US energy policy. → Taking into account measurement error in the price variable increase price elasticity. → Room for discouraging residential electricity consumption using price increases.

Price regions and socio-economic efficiency

International Nuclear Information System (INIS)

2001-01-01

In a market without market power, a system in which each node (small price regions) has its own price most effective. The loss when two nodes are combined into one price region is greater the more elastic the demand and supply curve is in the two regions and the more unequal the impact on the flow across the bottleneck is

Implications Of Aggregate Demand Elasticity For The Phillips Curve

OpenAIRE

Ben L. Kyer; Gary E. Maggs

2004-01-01

While the general relationship between the aggregate supply curve and the Phillips curve is recognized, the importance of aggregate demand and, in particular, aggregate demand elasticity, for the inflation-unemployment relationship has been untreated. We believe, however, that the elasticity of aggregate demand with respect to the general price level does have some significance for the short-run Phillips curve since, on a general level, the economy's equilibrium price level, inflation rate, r...

Testing and estimating time-varying elasticities of Swiss gasoline demand

International Nuclear Information System (INIS)

Neto, David

2012-01-01

This paper is intended to test and estimate time-varying elasticities for gasoline demand in Switzerland. For this purpose, a smooth time-varying cointegrating parameters model is investigated in order to describe smooth mutations of the Swiss gasoline demand. The methodology, based on Chebyshev polynomials, is rigorously outlined. Our empirical finding states that the time-invariance assumption does not hold for long-run price and income elasticities. Furthermore they highlight that gasoline demand passed through some periods of sensitivity and non sensitivity with respect to the price. Our empirical statements are of great importance to assess the performance of a gasoline tax as an instrument for CO 2 reduction policy. Indeed, such an instrument can contribute to reduce emissions of greenhouse gases only if the demand is not fully inelastic with respect to the price. Our results suggest that such a carbon-tax would not be always suitable since the price elasticity is found not stable over time and not always significant.

Quasi-experimental taxation elasticities of US gasoline demand

International Nuclear Information System (INIS)

Goel, R.K.

1994-01-01

Taxation elasticities provide inputs in public policy aimed at raising revenues. Using the quasi-experimental method, this paper calculates gasoline taxation elasticities for the USA over 1952-86. The medium (mean) elasticity over this period is found to be -0.075 (-0.122). However, the elasticity following the oil shock of 1973 is found to be statistically different from the pre-shock elasticity. Reasons for this change in elasticity are discussed. The implication of this analysis is that tax policies based on price elasticities, rather than on tax elasticities, might be using an inappropriate elasticity estimate and consequently misinterpreting the government's ability to raise tax revenues. (author)

The economic cost of fuel price subsidies in Ghana

Science.gov (United States)

Ofori, Roland Oduro

I adapt the Harberger formula for deadweight loss to develop approximations for the deadweight loss created by multiple fuel price subsidies. I also estimate the own-price, cross-price, and income elasticities of demand for gasoline and diesel in Africa. I use data on fuel prices and sales in combination with my formulas and elasticity estimates to calculate the deadweight loss of fuel price subsidies in Ghana from 2009 to 2014. I show that the average efficiency cost of the gasoline and diesel price subsidies in Ghana is 0.8% of fuel price subsidy transfers. This result stresses the futility of basing subsidy reforms on economic efficiency losses, which are relatively small due to very inelastic energy demand, and the need for such reforms to be motivated by the poor-targeting of subsidies to low-income households and the impact of subsidies on government debt-financing.

Elasticity of energy consumption

International Nuclear Information System (INIS)

Stam, M.

2004-01-01

Insight is given into the price elasticities of several energy carriers. Next, attention is paid to the impact of the discussion on changes of the Regulating Energy Levy (REB, abbreviated in Dutch) in the Netherlands [nl

Short- and long-run elasticities of electricity demand in the Korean service sector

International Nuclear Information System (INIS)

Lim, Kyoung-Min; Lim, Seul-Ye; Yoo, Seung-Hoon

2014-01-01

This paper attempts to examine the electricity demand function in the Korean service sector using the annual data covering the period 1970–2011. The short- and long-run elasticities of electricity demand with respect to price and income are empirically estimated using a co-integration and error-correction model. The short- and long-run price elasticities are estimated to be −0.421 and −1.002, respectively. The short- and long-run income elasticities are computed to be 0.855 and 1.090, respectively. Electricity demand in the service sector is inelastic to changes in both price and income in the short-run, but elastic in the long-run. Therefore, it appears that a pricing policy is more effective than the direct regulation of reducing electricity demand in the long-run in order to stabilize the electricity demand in the service sector. Moreover, it is necessary to encourage a more efficient use of electricity to cope with increasing demand for electricity following economic growth because the electricity demand in the service sector is income-elastic in the long-run. - Highlights: • We examine the electricity demand function in the Korean service sector. • We use the annual data covering the period 1970–2011. • The demand function is estimated using a co-integration and error-correction model. • The short- and long-run price elasticities are −0.421 and −1.002, respectively. • The short- and long-run income elasticities are 0.855 and 1.090, respectively

Farm-retail price spread for pork in Malaysia

OpenAIRE

Tey, (John) Yeong-Sheng; Randy, Stringer; Wendy, Umberger

2009-01-01

The price difference between farm and retail levels is called price spread, which is constituted mostly by marketing costs and profits. From the price spread, this paper intends to estimate elasticities of price transmission for pork in Malaysia via different empirical model specifications of markup pricing model. Using data from January 1997 to December 2007, a quantitative analysis of farm-to-retail price spreads was undertaken for pork in Malaysia. It was found that retail price is the onl...

Labor demand effects of rising electricity prices: Evidence for Germany

International Nuclear Information System (INIS)

Cox, Michael; Peichl, Andreas; Pestel, Nico; Siegloch, Sebastian

2014-01-01

Germany continues to play a pioneering role in replacing conventional power plants with renewable energy sources. While this might be beneficial with respect to environmental quality, it also implies increasing electricity prices. The extent to which this is associated with negative impacts on employment depends on the interrelationship between labor and electricity as input factors in the production process. In this paper, we estimate cross-price elasticities between electricity and heterogeneous labor for the German manufacturing sector. We use administrative linked employer–employee micro-data combined with information on sector-level electricity prices and usage over the period 2003–2007. We find positive, but small conditional cross-price elasticities of labor demand with respect to electricity prices, which means that electricity as an input factor can be replaced by labor to a limited extent when the production level is held constant. In the case of adjustable output, we find negative unconditional cross-price elasticities, implying that higher electricity prices lead to output reductions and to lower labor demand, with low- and high-skilled workers being affected more than medium-skilled. Resulting adverse distributional effects and potential overall job losses may pose challenges for policy-makers in securing public support for the German energy turnaround. - Highlights: • We estimate cross-price elasticities for electricity and labor in manufacturing. • We use linked employer–employee micro-data from Germany for 2003 to 2007. • We find a weak substitutability between electricity and labor for constant output. • We find complementarity between electricity and labor for adjustable output. • Low- and high-skilled workers are more affected than medium-skilled

Measurement of Conjectural Variations Elasticity in an Oligopoly Structure (Using Iwata Approach for Iranians Food and Beverage Industry

Directory of Open Access Journals (Sweden)

M. Nabishahyakitash

2015-05-01

Full Text Available In this paper, we investigate Conjectural Variations elasticity in Iranians Food and Beverage industry using Iwata approach, The conjectural variation function is extracted from demand and supply information also optimization process on producers’ behavior. The experimental estimates of conjectural variation elasticities were obtained based on price elasticity of demand, cost elasticity and marginal cost elasticity for the selected industries. In this research demand function AIDS was used to obtain the price elasticity. The AIDS function was estimated using SUR and the demand price elasticity is calculated by calfent. The results show that "Vegetable oils and animal" industry with 19.37 have the most conjectural variation elasticity among the selected industries (The more divergent the conjectural variation elasticity is from zero the more likely the monopoly exists. In addition, dairy, sugar and malt industries have the most conjectural variation elasticity with 18.01, 17.18, and 10.51 respectively.

Effects of price and availability on abortion demand.

Science.gov (United States)

Gohmann, S F; Ohsfeldt, R L

1993-10-01

This study explained the variation in US state abortion demand due to the price of services, the net of insurance cost of birth services, the ability to pay, contraceptive use, individual attitudes regarding abortion, and government policy affecting cost of benefits of terminating an unintended pregnancy or of carrying to birth. The empirical model uses pooled data from 48 states for 1982, 1984, 1985, and 1987. Prices are deflated to 1977 dollars. Another two-staged least squares model is based on cross-sectional state level data for 1985. The dependent variable is the log of abortion per 1000 pregnancies. Other variables pertain to income, education, labor force, family planning, tax, aid to families with dependent children, religion, and abortion-related measures. The results of the cross-sectional analysis are consistent with Medoff's and Garbacz's findings. The estimated coefficient of per capita income is positive with a point elasticity ranging from 0.62 to 1.0. The model with the most complete specifications has an abortion price elasticity range from -0.75 to -1.3 and is statistically significant when religion measures are excluded. The Hausman test shows the pro-choice variable significantly correlated with the error term. The net price of birth services is not statistically significant. Catholic religion and no religion are only significant when the abortion provider variable is excluded. The suggestion is that the effect of Catholicism is ambiguous. In the pooled analysis, the fixed effects model is used to control for abortion attitudes and other unobserved factors. Abortion demand includes abortion per 1000 pregnancies, the ratio of abortions to pregnancies, and the logarithm of abortions per 1000 pregnancies. Higher income is associated with a higher abortion rate and elasticities of 0.76 and 0.35 and is associated with a higher pregnancy rate. The abortion ratio is found to be elastic with respect to price, and price elasticities are sensitive to

Asset Pricing and Monetary Policy

OpenAIRE

Bingbing Dong

2014-01-01

This paper examines the role of money in understanding the behavior of asset prices and whether and how monetary policy should react to asset prices such as stock prices and equity premiums. To do so, I introduce money via the form of transaction cost into a production economy with limited stock market participation where agents with lower inter-temporal elasticity of substitution (IES), called non-stockholders, have no access to stock market. In addition to facilitating transactions of consu...

Residential Water Demand in a Mexican Biosphere Reserve: Evidence of the Effects of Perceived Price

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Marco Antonio Almendarez-Hernández

2016-09-01

Full Text Available The purpose of this paper is to provide empirical evidence for policy-makers of water management, evaluate the applicability of economic variables such as price and other factors that affect demand, and determine the impact thereof on decision-making surrounding water management in the El Vizcaino Biosphere Reserve in Mexico. We estimated a dynamic function with an average price specification, as well as price perception specification. Findings demonstrated that consumers tend to react to perceived average price but not to the marginal price. Furthermore, long-term price elasticity was found to be higher than short-term elasticity, and both elasticities were found to be inelastic. Inelastic elasticities, coupled with rising prices, generate substantial revenues with which to improve water planning and supply quality and to expand service coverage. The results suggest that users’ level of knowledge surrounding price is a key factor to take into account when restructuring rates, especially in situations where consumers do not readily possess the necessary information about their rate structure and usage within a given billing period. Furthermore, the results can help water management policy-makers to achieve goals of economic efficiency, social equity, and environmental sustainability.

Projected irrigation requirements for upland crops using soil moisture model under climate change in South Korea

Science.gov (United States)

An increase in abnormal climate change patterns and unsustainable irrigation in uplands cause drought and affect agricultural water security, crop productivity, and price fluctuations. In this study, we developed a soil moisture model to project irrigation requirements (IR) for upland crops under cl...

Is youth smoking responsive to cigarette prices? Evidence from low- and middle-income countries.

Science.gov (United States)

Kostova, Deliana; Ross, Hana; Blecher, Evan; Markowitz, Sara

2011-11-01

To estimate the price elasticity of cigarette demand among youth in low- and middle-income countries (LMIC). The Global Youth Tobacco Survey was used to obtain data on the smoking behaviour of 315,353 adolescents from 17 LMIC. Two-part model of cigarette demand with country fixed effects. The first part estimates the impact of prices on smoking participation while the second part estimates the impact of prices on the number of cigarettes smoked among current smokers. Besides controlling for individual characteristics such as Age, Gender, Parental Smoking and availability of Pocket Money, the authors control for confounding environmental factors such as anti-smoking sentiment, the prevalence of cigarette advertising and anti-tobacco media messAges, and ease of purchasing cigarettes. All countries in this study are represented with at least two observations over time, which allows us to control for unobserved country characteristics and/or policies that may influence smoking patterns within countries. Cigarette price is an important determinant of smoking. The estimated price elasticity of smoking participation is -0.74, and the estimated price elasticity of conditional cigarette demand is approximately -1.37. The total price elasticity of cigarette demand is -2.11, implying that an increase in price of 10% would reduce youth cigarette consumption by 21.1% at the mean.

In search of a corrected prescription drug elasticity estimate: a meta-regression approach.

Science.gov (United States)

Gemmill, Marin C; Costa-Font, Joan; McGuire, Alistair

2007-06-01

An understanding of the relationship between cost sharing and drug consumption depends on consistent and unbiased price elasticity estimates. However, there is wide heterogeneity among studies, which constrains the applicability of elasticity estimates for empirical purposes and policy simulation. This paper attempts to provide a corrected measure of the drug price elasticity by employing meta-regression analysis (MRA). The results indicate that the elasticity estimates are significantly different from zero, and the corrected elasticity is -0.209 when the results are made robust to heteroskedasticity and clustering of observations. Elasticity values are higher when the study was published in an economic journal, when the study employed a greater number of observations, and when the study used aggregate data. Elasticity estimates are lower when the institutional setting was a tax-based health insurance system.

Biofuel and Food-Commodity Prices

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David Zilberman

2012-09-01

Full Text Available The paper summarizes key findings of alternative lines of research on the relationship between food and fuel markets, and identifies gaps between two bodies of literature: one that investigates the relationship between food and fuel prices, and another that investigates the impact of the introduction of biofuels on commodity-food prices. The former body of literature suggests that biofuel prices do not affect food-commodity prices, but the latter suggests it does. We try to explain this gap, and then show that although biofuel was an important contributor to the recent food-price inflation of 2001–2008, its effect on food-commodity prices declined after the recession of 2008/09. We also show that the introduction of cross-price elasticity is important when explaining soybean price, but less so when explaining corn prices.

US energy product supply elasticities. A survey and application to the US oil market

International Nuclear Information System (INIS)

Dahl, Carol; Duggan, Thomas E.

1996-01-01

We survey studies of simple energy supply models to find the most promising technique for developing supply elasticities in the U.S. crude oil market. The two dozen studies located include direct estimates of energy supply elasticities or cost studies from which supply or reserve elasticities can be inferred. We include all available studies for all forms of energy both primary and secondary. We find direct estimates of oil supply to obtain weak results unless depletion and price expectations are included. Oil product supply elasticities vary widely across studies but appear to be elastic. Studies that estimate reserve price elasticities by computing reserve costs appear to be the most promising for estimating reserve elasticities for fossil fuel supply. Hence we apply this technique to US oil reserves and find a reserve elasticity of 1.27

Elasticity of Long Distance Travelling

DEFF Research Database (Denmark)

Knudsen, Mette Aagaard

2011-01-01

With data from the Danish expenditure survey for 12 years 1996 through 2007, this study analyses household expenditures for long distance travelling. Household expenditures are examined at two levels of aggregation having the general expenditures on transportation and leisure relative to five other...... aggregated commodities at the highest level, and the specific expenditures on plane tickets and travel packages at the lowest level. The Almost Ideal Demand System is applied to determine the relationship between expenditures on transportation and leisure and all other purchased non-durables within...... packages has higher income elasticity of demand than plane tickets but also higher than transportation and leisure in general. The findings within price sensitiveness are not as sufficient estimated, but the model results indicate that travel packages is far more price elastic than plane tickets which...

Is the price effect on fuel consumption symmetric? Some evidence from an empirical study

International Nuclear Information System (INIS)

Sentenac-Chemin, Elodie

2012-01-01

We generally consider that the price elasticity of the energy demand is quite small. But it appears that strong increases in gasoline price lead to modifications in consumer behaviors. The high volatility of petroleum prices and the strong increases since the beginning of 2000 justify an analysis of price effects on gasoline consumption. We estimate the effects of price variations on gasoline consumption, in the United States and India. We use a co-integration modelling to test for long-run relationship between gasoline consumption, income, price and vehicle ownership in the two countries. We use an error correction model to test for short-run prices effects and more precisely for asymmetric effects on demand of increases and decreases in gasoline prices. The main conclusions are the following. Concerning the United States, the long-term price elasticity is relatively high for an industrialised country because gasoline taxes are low, but we show that households are more sensitive to a price increase than a price decrease. About India, price elasticity in the long-run is quite high but is quite small in the short-run. It is not surprising for an emergent country. It seems that there is no asymmetric effect of price variations on gasoline consumption.

Pricing strategy for aesthetic surgery: economic analysis of a resident clinic's change in fees.

Science.gov (United States)

Krieger, L M; Shaw, W W

1999-02-01

The laws of microeconomics explain how prices affect consumer purchasing decisions and thus overall revenues and profits. These principles can easily be applied to the behavior aesthetic plastic surgery patients. The UCLA Division of Plastic Surgery resident aesthetics clinic recently offered a radical price change for its services. The effects of this change on demand for services and revenue were tracked. Economic analysis was applied to see if this price change resulted in the maximization of total revenues, or if additional price changes could further optimize them. Economic analysis of pricing involves several steps. The first step is to assess demand. The number of procedures performed by a given practice at different price levels can be plotted to create a demand curve. From this curve, price sensitivities of consumers can be calculated (price elasticity of demand). This information can then be used to determine the pricing level that creates demand for the exact number of procedures that yield optimal revenues. In economic parlance, revenues are maximized by pricing services such that elasticity is equal to 1 (the point of unit elasticity). At the UCLA resident clinic, average total fees per procedure were reduced by 40 percent. This resulted in a 250-percent increase in procedures performed for representative 4-month periods before and after the price change. Net revenues increased by 52 percent. Economic analysis showed that the price elasticity of demand before the price change was 6.2. After the price change it was 1. We conclude that the magnitude of the price change resulted in a fee schedule that yielded the highest possible revenues from the resident clinic. These results show that changes in price do affect total revenue and that the nature of these effects can be understood, predicted, and maximized using the tools of microeconomics.

Divisia amount and price index for energy consumption

International Nuclear Information System (INIS)

Bentzen, J.

1993-01-01

In connection with the calculation of total energy consumption related to aggregation of the individual fuel's combustion values, an alternative to Btu aggregation (combustion value measurement), designated the ''Divisia index'', is presented. This represents an economic measure for energy consumption. The Divisia index is demonstrated in relation to total national energy consumption and total energy consumption within the Danish housing sector and also with regard to the estimation of price and income elasticity within energy demand. It is only possible to utilize the Divisia index in relation to the last 20 years, which is the period where energy consumption has stagnated. The question of possible irreversible effects on energy consumption caused by large variations in energy prices is discussed. It is suggested that the reaction to a fall in prices is different and less significant than is the case with price rises. In the long term, results point at a reasonably high price elasticity within energy demand. (AB) (22 refs.)

Economical Evaluation of Single Irrigation Efficient of Rainfed Barley under Different Agronimic Managements at On-farm Areas

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Ali Reza Tavakoli

2016-02-01

Full Text Available Introduction: Two of the main challenges in developing countries are food production and trying to get a high income for good nutrition and reduction of poverty. Cereals and legumes are the most important crops in the rainfed areas of the country occupying the majority of dry land areas. Irrigated production systems had a main role in food production in the past years; but unfortunately, in recent years, with high population and competition of industry and environment with agricultural sectors, getting adequate irrigation water is difficult. The main purpose of this study is to determine the best option of crop agronomic management. Rainfed agriculture is important in the world; because this production system establishes %80 of the agriculture area and prepares %70 of the food in the world. In the Lorestan province, production area for rainfed barley is 120,000 ha and the amount produced is 120000 ton (approximately 1009 kg per ha. The purposes of this study were to evaluate cost, benefit and profit of rainfed barley production, economical and non-economical substitution of treatments in different agronomic management, study of sale return, cost ratio, determining break-even of price and comparing it with the guaranteed price of barley and estimating the value of water irrigation. Materials and Methods: This research was carried out by sample farmers (12 farmers on rainfed barley at the Honam selected site in the Lorestan province during 2005-07. At on-farm areas of the upper Karkheh River Basin (KRB three irrigation levels were analyzed (rainfed, single irrigation at planting time and single irrigation at spring time under two agronomic managements (advanced management (AM and traditional management (TM. Data was analyzed by Partial Budgeting (PB technique, Marginal Benefit-Cost Ratio (MBCR, and economical and non-economical test. For estimation of net benefit the following formula was used: (1 Where: N.B: Net income (Rials/ ha , B(w : Gross

PRICES - PREREQUISITE OF MARKET DEVELOPMENT

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VĂDUVA MARIA

2017-08-01

Full Text Available Prices are the key points of transfer and interactions. Balance means knowing the real demand and adapting thier supply at its level and structure. In studying the prices, the knowledge of economic content and the mechanism of their formation in exchange process is a crucial prerequisites to accomplish the transition from theoretical foundations to practical foundations of concrete modalities, of pricing techniques. If demand can assimilate the production of considered enterprises, then the manufacturer is concerned to determine that level of production for which will get maximum profit, profitability threshold, elasticity of supply compared with the price, to choose the best outlet. Price depends on the intersection of demand and supply

Is the price effect on fuel consumption symmetric? some evidence from an empirical study

International Nuclear Information System (INIS)

Sentenac Chemin, E.

2009-04-01

We generally consider that the price elasticity of the energy demand is quite small. But it appears that strong increases in gasoline price lead to modifications in consumer behaviours. The high volatility of petroleum prices and thus gasoline prices and the strong increases since the beginning of 2000 justify an analysis of price effects on gasoline consumption. Thus, in this paper, we estimate the effects of price variations on gasoline consumption, in the short and the long-term, in two countries: the United States and India. We use a co-integration modelling to test for long-run relationship between gasoline consumption, income, price and vehicle ownership in the two countries. We use an error correction model to test for short-run prices effects and more precisely for asymmetric effects on demand of increases and decreases in gasoline prices. The main conclusions are the following. - The United States: (1) The long-term price elasticity is relatively high for an industrialised country because gasoline taxes are low (2) Households are more sensitive to a price increase than a price decrease. - India: (1) Price elasticity in the long-run is quite high but is quite small in the short run. It is not surprising for an emergent country (2) It seems that there is no asymmetric effect of price variations on gasoline consumption. (author)

Credit price optimisation within retail banking | Terblanche | ORiON

African Journals Online (AJOL)

The willingness of a customer to pay for a product or service is mathematically captured by a price elasticity model. The model relates the responsiveness of customers to a change in the quoted price. In addition to overall price sensitivity, adverse selection could be observed whereby certain customer segments react ...

Toward an Elasticity of Chip-N-Saw: Demand and Supply Models of Chip-N-Saw Stumpage in Louisiana

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Shaun M. Tanger

2018-04-01

Full Text Available Softwood chip-n-saw (CNS is a relatively new stumpage product in the sawtimber- and pulpwood-dominated stumpage markets in the U.S. South. Based on a quarterly data series from 2003 to 2016, this study estimates the demand and supply models of the softwood CNS stumpage market in Louisiana. The two-stage least squares (2SLS results reveal that own price elasticity of demand (PED is price elastic, and the cross-price elasticity (XEDwith sawtimber approaches unit elasticity. On the supply side, CNS is price inelastic in supply (PES, but more responsive to own price changesthan sawtimber quantity supplied. Further, severance tax increases are found to decrease the supply of CNS, indicating that suppliers are responsive to severance tax incidence. As the first empirical estimation of CNS, the findings should be of interest to those involved in the analysis of Southeastern stumpage markets.

The price sensitivity of cigarette consumption in Bangladesh: evidence from the International Tobacco Control (ITC) Bangladesh Wave 1 (2009) and Wave 2 (2010) Surveys.

Science.gov (United States)

Nargis, Nigar; Ruthbah, Ummul H; Hussain, A K M Ghulam; Fong, Geoffrey T; Huq, Iftekharul; Ashiquzzaman, S M

2014-03-01

In Bangladesh, the average excise tax on cigarettes accounted for just 38% of the average retail price of cigarettes in 2009, and 45% in 2010. Both these rates are well below the WHO recommended share of 70% of the retail price at a minimum. There is thus ample room for raising taxes on cigarettes in Bangladesh. The objective of the present work was therefore to estimate the price elasticity of demand for cigarettes and the effect of tax increases on the consumption of cigarettes and on tax revenue in Bangladesh. Based on data from Wave 1 (2009) and Wave 2 (2010) of the International Tobacco Control Bangladesh Survey, we estimated the overall impact of a price change on cigarette demand using a two-part model. The total price elasticity of cigarettes was measured by the sum of the elasticity of smoking prevalence and the elasticity of average daily consumption conditional on smoking participation. The price elasticity estimates were used in a simulation model to predict changes in cigarette consumption and tax revenue from tax and price increases. The total price elasticity of demand for cigarettes was estimated at -0.49. The elasticity of smoking prevalence accounted for 59% of the total price elasticity. The price elasticity of cigarette consumption is higher for people belonging to lower socioeconomic status. Increases in taxes would result in a significant reduction in cigarette consumption while increasing tax revenue. Raising cigarette prices through increased taxation could lead to a win-win-win situation in Bangladesh: it would reduce cigarette consumption, increase tobacco tax revenue and potentially decrease socioeconomic inequities.

An analysis of price competitiveness of CNG (compressed natural gas) versus gasoline: estimation of the elasticities of demand by CNG in a recent period in Brazil; Uma analise da competitividade de preco do GNV (Gas Natural Veicular) frente a gasolina: estimacao das elasticidades da demanda por GNV no Brasil no periodo recente

Energy Technology Data Exchange (ETDEWEB)

Iootty, Mariana; Pinto Junior, Helder; Roppa, Bruna; Biasi, Guilherme de [Universidade Federal do Rio de Janeiro (UFRJ), RJ (Brazil). Inst. de Economia

2004-07-01

One of the main determinants to the expansion of natural gas on the Brazilian domestic market is its price. Hence, it is important to analyze the price competitiveness of natural gas vis-a-vis its competitors. The current paper focuses on the market of natural gas in vehicles (the compressed natural gas - CNG), and uses co-integration techniques to estimate the price-elasticity of CNG, the cross-elasticity of CNG and gasoline, and the income-elasticity. The results suggest that price is a relevant factor in the long-run, while in the short-run income is the most significant determinant of the demand variation. In addition, the paper also shows an imperfect substitutability between CNG and gasoline. (author)

Differential Responsiveness to Cigarette Price by Education and Income among Adult Urban Chinese Smokers

Science.gov (United States)

Huang, Jidong; Zheng, Rong; Chaloupka, Frank J.; Fong, Geoffrey T.; Jiang, Yuan

2015-01-01

Background There are few studies that examine 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 The goal of this study is to estimate the conditional cigarette consumption price elasticity among adult urban smokers in China using individual level longitudinal survey data. We also examine the differential responses to cigarette price increases among groups with different income and/or educational levels. Methods Multivariate analyses using the general estimating equations (GEE) method were conducted to estimate the conditional cigarette demand price elasticity using data from the International Tobacco Control (ITC) China Survey, a longitudinal survey of adult smokers in seven cities in China. The first three waves of the ITC China Survey data were used in this analysis. Analyses based on subsample by education and income were conducted. Findings Our results show that overall conditional cigarette demand price elasticity ranges from −0.12 to −0.14, implying a 10% increase in cigarette price would result in a reduction in cigarette consumption among adult urban Chinese smokers by 1.2% to 1.4%. No differential responses to cigarette price increase were found across education levels. The price elasticity estimates do not differ between high income smokers and medium income smokers. However, cigarette consumption among low income smokers did not seem to decrease after a price increase, at least among those who continued to smoke. Conclusion Relative to many other low- and middle-income countries, cigarette consumption among Chinese adult smokers is not very sensitive to changes in cigarette prices. The total impact of cigarette price increase would be larger if its impact on smoking initiation and cessation, as well as the price-reducing behaviors such as brand switching and trading down, were taken into account. PMID

Symmetry in farm-retail price transmission: pork in Malaysia

OpenAIRE

Tey, (John) Yeong-Sheng

2009-01-01

This study intends to determine the farm-retail price transmission behaviors of pork in Malaysia to serve as a good implication for pork pricing system in Malaysia. Using data from January 1997 to December 2008, both the Houck and ECM approaches were found symmetric where a change in farm price of pork was observed to have similar change in retail price of pork in Malaysia. The price setting system of pork can therefore be further described by the estimated price transmission elasticities whe...

Household demand elasticities for meat products in Uruguay

Energy Technology Data Exchange (ETDEWEB)

Lanfranco, B. A.; Rava, C.

2014-06-01

This article analyzed the demand for meats at household level over the past decade in Uruguay, a country that exhibits a very high per capita consumption of these products. In particular, the consumption of beef is one of the highest in the world and only comparable to Argentina. The analysis involved a two-step estimation of an incomplete system of censored demand equations using household data from the last available national income and expenditure survey (2005/06). Thirteen meat products were included in the analysis: six broad beef products (de boned hindquarter cuts, bone-in hindquarter cuts, ground beef, rib plate, bone-in forequarter cuts, and other beef cuts), four products from other meats (sheep, pork, poultry, and fish), and three generic mixed-meat products. A complete set of short-term income, own-price and cross-price elasticities were computed and reported along with their 90% confidence intervals (CI). The results were consistent with both economic theory and empirical evidence as well as with the expected behavior, considering the relevance of these products, particularly beef, in the diet of Uruguayan consumers. All meat items were necessary goods and evidenced income-inelastic responses, which was expected given their high consumption level. All meats behaved as normal goods although exhibiting different reactions to changes in price. In general, beef cuts were more price elastic than other more broadly defined products. The more specific and dis aggregated the meat product the higher its corresponding direct price elasticity. The complement/substitute relationships found in this study were highly depended on the specific product combinations. (Author)

Household demand elasticities for meat products in Uruguay

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Bruno A. Lanfranco

2014-01-01

Full Text Available This article analyzed the demand for meats at household level over the past decade in Uruguay, a country that exhibits a very high per capita consumption of these products. In particular, the consumption of beef is one of the highest in the world and only comparable to Argentina. The analysis involved a two-step estimation of an incomplete system of censored demand equations using household data from the last available national income and expenditure survey (2005/06. Thirteen meat products were included in the analysis: six broad beef products (deboned hindquarter cuts, bone-in hindquarter cuts, ground beef, rib plate, bone-in forequarter cuts, and other beef cuts, four products from other meats (sheep, pork, poultry, and fish, and three generic mixed-meat products. A complete set of short-term income, own-price and cross-price elasticities were computed and reported along with their 90% confidence intervals (CI. The results were consistent with both economic theory and empirical evidence as well as with the expected behavior, considering the relevance of these products, particularly beef, in the diet of Uruguayan consumers. All meat items were necessary goods and evidenced income-inelastic responses, which was expected given their high consumption level. All meats behaved as normal goods although exhibiting different reactions to changes in price. In general, beef cuts were more price elastic than other more broadly defined products. The more specific and disaggregated the meat product the higher its corresponding direct price elasticity. The complement/substitute relationships found in this study were highly depended on the specific product combinations.

The Limits of Water Pricing in a Developing Country Metropolis: Empirical Lessons from an Industrial City of Pakistan

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Shabbir Ahmad

2017-07-01

Full Text Available This paper seeks to question the effectiveness of water pricing as a means of consumer behavioural change in urban centres of the Global South by analysing the domestic usage for water in a major industrial city of Pakistan. Using survey data of 1100 households from Faisalabad city, we estimate the price and income elasticities of water demand. Instrumental variable methods are applied to overcome the endogeneity issues of water pricing. The findings reflect that price and income elasticities vary across different groups. Price elasticities range from −0.43 to −0.71, and income elasticities vary between 0.01 and 0.12. These findings suggest that pricing policies may have limited scope to drive households’ water consumption patterns. However, these empirics may suggest that policy makers should design an appropriate tariff structure to increase revenues that can be invested to further improve the existing water infrastructure. The study findings also suggest that non-pricing instruments, such as water saving campaigns, may be helpful in driving an efficient use of water in rapidly growing cities in the developing world.

The importance of time cost in pricing outpatient care.

Science.gov (United States)

Heshmat, S

1988-01-01

The purpose of this article is to discuss the component of the full price charged to patients using outpatient care. The full price of a visit to a physician is equal to out-of-pocket payment (money price), and time costs. In particular, the article discusses the concept of time price (marginal value of time for a patient), and presents a specific example to illustrate the concept of time price elasticity. The concepts and information presented in this article can help marketing managers in setting pricing strategy that would explicitly consider time price.

The substitution bias of the consumer price index

OpenAIRE

Frenger, Petter

2006-01-01

Abstract: The paper uses elementary consumer theory to propose an inflation independent ratio definition of the substitution bias of the Laspeyres consumer price index, and derives an approximate substitution bias which depends on the size of the price change as measured by a norm in the Laspeyres plane and on the elasticity of substitution in the direction of the price change. This norm or distance measure can be interpreted as a price substitution index which yields useful in...

Food prices and poverty negatively affect micronutrient intakes in Guatemala.

Science.gov (United States)

Iannotti, Lora L; Robles, Miguel; Pachón, Helena; Chiarella, Cristina

2012-08-01

Limited empirical evidence exists for how economic conditions affect micronutrient nutrition. We hypothesized that increasing poverty and rising food prices would reduce consumption of high-quality "luxury" foods, leading to an increased probability of inadequacy for several nutrients. The 2006 Guatemala National Living Conditions Survey was analyzed. First, energy and nutrient intakes and adequacy levels were calculated. Second, the income-nutrient relationships were investigated by assessing disparities in intakes, determining income-nutrient elasticities, and modeling nutrient intakes by reductions in income. Third, the food price-nutrient relationships were explored through determination of price-nutrient elasticities and modeling 2 price scenarios: an increase in food prices similar in magnitude to the food price crisis of 2007-2008 and a standardized 10% increase across all food groups. Disparities in nutrient intakes were greatest for vitamin B-12 (0.38 concentration index) and vitamin A (0.30 concentration index); these nutrients were highly and positively correlated with income (r = 0.22-0.54; P < 0.05). Although the baseline probability of inadequacy was highest for vitamin B-12 (83%), zinc showed the greatest increase in probability of inadequacy as income was reduced, followed by folate and vitamin A. With rising food prices, zinc intake was most acutely affected under both scenarios (P < 0.05) and folate intake in the poorest quintile (+7 percentage points) under the 10% scenario. Price-nutrient elasticities were highest for vitamin B-12 and the meat, poultry, and fish group (-0.503) and for folate and the legumes group (-0.343). The economic factors of food prices and income differentially influenced micronutrient intakes in Guatemala, notably zinc and folate intakes.

Análise da elasticidade de transmissão de preços no mercado brasileiro de algodão Analysis of price transmission elasticity in the Brazilian cotton market

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Marisa Zeferino Barbosa

2002-01-01

Full Text Available The article analyzes the elasticity of price transmission in the Brazilian cotton market from January, 1985, to December, 2000. For this purpose, the Dickey-Fuller Augmented (ADF unit root test, the Johansen cointegration test, the Vector Error Correction model (VEC, and the exogenicity test are applied. The results show that the One Price Law does not apply to the Brazilian cotton market, because variations in cotton international prices are not fully transmitted to domestic prices in Brazil in the long run. The exogenicity test shows that domestic cotton prices in Brazil do not react to changes in the long run equilibrium relationship. Possibly, these results are directly associated with government intervention in the sector (1985 to 1988 as well as to the credit conditions available for cotton acquisition in the international market between 1990 and 1997.

Lamb Production Costs: Analyses of Composition and Elasticities Analysis of Lamb Production Costs

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C. Raineri

2015-08-01

Full Text Available Since lamb is a commodity, producers cannot control the price of the product they sell. Therefore, managing production costs is a necessity. We explored the study of elasticities as a tool for basing decision-making in sheep production, and aimed at investigating the composition and elasticities of lamb production costs, and their influence on the performance of the activity. A representative sheep production farm, designed in a panel meeting, was the base for calculation of lamb production cost. We then performed studies of: i costs composition, and ii cost elasticities for prices of inputs and for zootechnical indicators. Variable costs represented 64.15% of total cost, while 21.66% were represented by operational fixed costs, and 14.19% by the income of the factors. As for elasticities to input prices, the opportunity cost of land was the item to which production cost was more sensitive: a 1% increase in its price would cause a 0.2666% increase in lamb cost. Meanwhile, the impact of increasing any technical indicator was significantly higher than the impact of rising input prices. A 1% increase in weight at slaughter, for example, would reduce total cost in 0.91%. The greatest obstacle to economic viability of sheep production under the observed conditions is low technical efficiency. Increased production costs are more related to deficient zootechnical indexes than to high expenses.

Electricity consumption in G7 countries: A panel cointegration analysis of residential demand elasticities

International Nuclear Information System (INIS)

Narayan, Paresh Kumar; Smyth, Russell; Prasad, Arti

2007-01-01

This article applies recently developed panel unit root and panel cointegration techniques to estimate the long-run and short-run income and price elasticities for residential demand for electricity in G7 countries. The panel results indicate that in the long-run residential demand for electricity is price elastic and income inelastic. The study concludes that from an environmental perspective there is potential to use pricing policies in the G7 countries to curtail residential electricity demand, and thus curb carbon emissions, in the long run. (author)

Price, tax and tobacco product substitution in Zambia.

Science.gov (United States)

Stoklosa, Michal; Goma, Fastone; Nargis, Nigar; Drope, Jeffrey; Chelwa, Grieve; Chisha, Zunda; Fong, Geoffrey T

2018-03-24

In Zambia, the number of cigarette users is growing, and the lack of strong tax policies is likely an important cause. When adjusted for inflation, levels of tobacco tax have not changed since 2007. Moreover, roll-your-own (RYO) tobacco, a less-costly alternative to factory-made (FM) cigarettes, is highly prevalent. We modelled the probability of FM and RYO cigarette smoking using individual-level data obtained from the 2012 and 2014 waves of the International Tobacco Control (ITC) Zambia Survey. We used two estimation methods: the standard estimation method involving separate random effects probit models and a method involving a system of equations (incorporating bivariate seemingly unrelated random effects probit) to estimate price elasticities of FM and RYO cigarettes and their cross-price elasticities. The estimated price elasticities of smoking prevalence are -0.20 and -0.03 for FM and RYO cigarettes, respectively. FM and RYO are substitutes; that is, when the price of one of the products goes up, some smokers switch to the other product. The effects are stronger for substitution from FM to RYO than vice versa. This study affirms that increasing cigarette tax with corresponding price increases could significantly reduce cigarette use in Zambia. Furthermore, reducing between-product price differences would reduce substitution from FM to RYO. Since RYO use is associated with lower socioeconomic status, efforts to decrease RYO use, including through tax/price approaches and cessation assistance, would decrease health inequalities in Zambian society and reduce the negative economic consequences of tobacco use experienced by the poor. © Article author(s) (or their employer(s) unless otherwise stated in the text of the article) 2018. All rights reserved. No commercial use is permitted unless otherwise expressly granted.

Elasticities of demand for gasoline in Canada and the United States

International Nuclear Information System (INIS)

Nicol, C.J.

2003-01-01

Fluctuations in the world price of oil, the concern with greenhouse gas emissions and the efforts to revive the 1997 Kyoto Protocol have resulted in renewed interest in the estimation of elasticities of demand for gasoline. In this paper, a complete system of demand equations is estimated, including an equation for the demand for gasoline. Canadian family expenditure (FAMEX) and United States consumer expenditure (CEX) survey data are used. Household-level data permits estimation of elasticities for various household groups. Also, differences in demand responsiveness to own-price and income changes are estimated for different regions in Canada and the United States. Demand is found to be own-price and income inelastic, on the whole, as reported in earlier studies. There is also variation in these elasticities across regions of Canada and the United States. However, larger differences are observed with respect to household size and housing tenure, than to region of residence

The Effect of Price and Socio-Economic Level on the Consumption of Sugar-Sweetened Beverages (SSB): The Case of Ecuador.

Science.gov (United States)

Paraje, Guillermo

2016-01-01

The objective of this article is to estimate the own-price, cross-price and income elasticities of demand for SSB in Ecuador, as an indispensable step for predicting a reduction in the consumption of said beverages caused by the potential implementation of taxes in Ecuador. In addition, the own-price, cross-price and income elasticities of sugar-free substitutes like mineral water and diet soft drinks and juices are also estimated. The data from the 2011-2012 ENIGHUR, which contains detailed information on household consumption and socioeconomic variables, was used. The estimates are done using Deaton's Almost Ideal Demand System (AIDS) which accounts for differences in the quality of goods purchased. This demand system is estimated for different socio-economic groups, according to total household expenditure. The results reveal own-price elasticities for SSB between -1.17 and -1.33 depending on the socio-economic group, in line with the existing evidence for developed countries. Own-price elasticity for non-SSB is between -1 and -1.24. Income elasticities reveal that both SSB and non-SSB are normal goods with elasticities decreasing for higher socio-economic groups. These results show that the consumption of SSB is sensitive to price changes, meaning that the implementation of taxes on said beverages could be effective in reducing their consumption. The fact that non-SSB are also sensitive to price changes would indicate that subsidies could be implemented for the production of some of them.

Are lower income smokers more price sensitive?: the evidence from Korean cigarette tax increases.

Science.gov (United States)

Choi, Seng Eun

2016-03-01

The cigarette excise taxes and the price of a typical pack of cigarettes in Korea have not increased since 2005, and effective tax rate as a fraction of price and real price of cigarettes have both been falling. As smoking prevalence is higher among lower income people than among higher income people in Korea, the regressivity of cigarette excise taxes is often cited as a barrier to tobacco tax and price policy. While studies in several other high-income countries have shown that higher income individuals are less price sensitive, few studies have examined the differential impact of cigarette tax increases by income group in Korea. Most of the Korean literature has estimated the demand for cigarettes using time-series aggregate sales data or household level survey data, which record household cigarette expenditures rather than individual cigarette consumption. Studies using survey data often lack time-series variation and estimate cigarette demand using household expenditure data, while studies using time-series aggregate sales data lack cross-sectional variation. I examine differences in the effects of cigarette price on the cigarette consumption of various income groups using individual-level cigarette consumption records from the Korea National Health and Nutrition Examination Survey (KHNNES). I also analyse the implications of cigarette taxes and price increases on the relative tax burdens of different income groups. I use pooled data from the KNHNES for the 1998-2011 period to estimate the price elasticity of cigarette consumption of four income groups. Treating cigarette consumption as a latent variable, I employ an econometric procedure that corrects for non-random sample selection, or the fact that some non-smokers might have smoked at a low enough price, and estimate the price elasticity of cigarette consumption by income group. The estimated price elasticities include the responsiveness of potential smokers as well as current smokers. Lower income Korean

The Arc Elasticity of Demand: A Note and Comment.

Science.gov (United States)

Vaughan, Michael B.

1988-01-01

Examines the suitability of the traditional arc elasticity measure as a component of the economics curriculum. Demonstrates that the midpoint measure is subject to shortcomings as it invariably approaches one when price changes become large. Discusses point elasticity of demand as an alternative to the midpoint measure in the principles course.…

Parallel Imports, Drag Price Control and Pharmaceutical Innovation

OpenAIRE

Ken Tabata; Testuya Shinkai; Satoru Tanaka; Makoto Okamura

2005-01-01

This paper examines how parallel importation influences pharmaceutical innovation and the welfare of the economy, when crossnational drug price differentials occur not only because of demand elasticity based factors, but also governmental drug price control based factors. By explicitly considering the governmental drug price control baaed factors, this paper shows that parallel importation may enhance pharmaceutical innovation, when the bargaining power of a foreign government is strong and t...

Price elasticity and pharmaceutical selection: the influence of managed care.

Science.gov (United States)

Domino, Marisa Elena; Salkever, David S

2003-07-01

State Medicaid programs are turning increasingly to managed care to control expenditures, although the types of managed care programs in use have changed dramatically. Little is known about the influence of the shifting Medicaid managed care arena on treatment decisions. This paper investigates factors affecting the selection of treatments for depression by providers participating in either of two Medicaid managed care programs. Of particular interest is the influence of medication price on the choice of treatment, since one vehicle through which managed care organizations can reduce total expenditures is by increasing the price sensitivity of participating providers. We take a new approach by phrasing the problem as a discrete choice, using a nested multinomial logit model for the analyses. Contrary to earlier literature, we find some evidence that physicians in both programs do take price into consideration when selecting among treatment options. HMO providers in particular demonstrate increased price sensitivity in the two most commonly prescribed categories of antidepressants. Copyright 2002 John Wiley & Sons, Ltd.

The marginal product value of irrigation water for potato and vine cultivation in the Sandveld region, South Africa

CSIR Research Space (South Africa)

De Lange, Willem J

2012-12-01

Full Text Available for the utilization of groundwater, we suspect that the price of electricity would be a suitable lever to influence irrigation behaviour. In light of the imminent Government electricity price hikes, we advise some further investigation on the impacts these impending...

Impact of US biofuel policy on US corn and gasoline price variability

International Nuclear Information System (INIS)

McPhail, Lihong Lu; Babcock, Bruce A.

2012-01-01

Despite a large number of studies that examine the influence of biofuels and biofuel policy on commodity prices, the impact of biofuel policy on commodity price variability is poorly understood. A good understanding of biofuel policy’s impact on price variability is important for mitigating food insecurity and assisting policy formation. We examine how U.S. ethanol policies such as the Renewable Fuel Standard (RFS) mandates and the blend wall affect the price variability of corn and gasoline. We first present an analytical and graphical framework to identify the effect and then use stochastic partial equilibrium simulation to measure the magnitude of the impacts. We show that RFS mandates and the blend wall both reduce the price elasticity of demand for corn and gasoline and therefore increase the price variability when supply shocks occur to the markets. This has important implications for policy actions with respect to maintaining or changing the current RFS mandates and/or blend wall in the US. -- Highlights: ► The RFS is found to lead to less elastic demand for corn and gasoline. ► Thus the RFS is also found to lead to more volatile corn and gasoline prices when supply shocks occur. ► The ethanol blend wall is found to lead to less elastic corn and gasoline demand. ► Thus the blend wall is also found to lead to more volatile corn and gasoline prices.

An analysis of factors affecting price volatility of the US oil market

International Nuclear Information System (INIS)

Yang, C.W.; Hwang, M.J.; Huang, B.N.

2002-01-01

This paper studies the price volatility of the crude oil market by examining the market structure of OPEC, the stable and unstable demand structure, and related elasticity of demand. In particular, the impacts of prosperity and recession of the world economy and the resulting demand shift on crude oil price are investigated. The error correction model is used to estimate the demand relations and related elasticity. The income effect on demand functions is evaluated to shed light on future prices. A simulation of potential oil prices under different scenarios on a cut of one million barrels per day by OPEC is evaluated. From our simulation, given the 4% cut in OPEC production, the oil price is expected to increase unless the recession is severe. The magnitude and scope of a price hike would be diminished if non-OPEC or domestic production were greatly expanded

Long- and short-run price asymmetries and hysteresis in the Italian gasoline market

International Nuclear Information System (INIS)

Bagnai, Alberto; Mongeau Ospina, Christian Alexander

2015-01-01

Using monthly data from 1994 to 2013 we study the long-run relation of the pre-tax retail prices of gasoline with crude price and the nominal exchange rate. We find a strongly significant long-run relation. We then use the nonlinear ARDL (NARDL) model to assess the asymmetries on both the short- and long-run elasticities, as well as the presence of hysteresis in the pricing behaviour. The estimation results confirm the presence of asymmetry in the long-run elasticities, with significant differences between the crude price and the exchange rate, as well as the presence of hysteresis in the relation between the retail price of gasoline and crude oil price. - Highlights: • The pass-through of crude oil prices and exchange rate into gasoline prices is examined. •We use an extended NARDL model to test for asymmetric reactions and hysteresis. • Asymmetric pricing behaviour features only in the long run. • The sign of the asymmetry differs between exchange rate and crude price changes. • The results are robust to the inclusion of several variables usually related to asymmetry

Water as an economic good in irrigated agriculture: theory and practice

NARCIS (Netherlands)

Hellegers, P.J.G.J.; Perry, C.J.

2004-01-01

This report describes the results of the Water Valuation and Pricing project, which aims to provide insight into the relevance of economics to typical problems found in irrigated agriculture. It first considers the theoretical basis for the use of economic instruments, then considers their

The Big Drink Debate: perceptions of the impact of price on alcohol consumption from a large scale cross-sectional convenience survey in north west England.

Science.gov (United States)

Cook, Penny A; Phillips-Howard, Penelope A; Morleo, Michela; Harkins, Corinne; Briant, Linford; Bellis, Mark A

2011-08-23

A large-scale survey was conducted in 2008 in north west England, a region with high levels of alcohol-related harm, during a regional 'Big Drink Debate' campaign. The aim of this paper is to explore perceptions of how alcohol consumption would change if alcohol prices were to increase or decrease. A convenience survey of residents (≥ 18 years) of north west England measured demographics, income, alcohol consumption in previous week, and opinions on drinking behaviour under two pricing conditions: low prices and discounts and increased alcohol prices (either 'decrease', 'no change' or 'increase'). Multinomial logistic regression used three outcomes: 'completely elastic' (consider that lower prices increase drinking and higher prices decrease drinking); 'lower price elastic' (lower prices increase drinking, higher prices have no effect); and 'price inelastic' (no change for either). Of 22,780 drinkers surveyed, 80.3% considered lower alcohol prices and discounts would increase alcohol consumption, while 22.1% thought raising prices would decrease consumption, making lower price elasticity only (i.e. lower prices increase drinking, higher prices have no effect) the most common outcome (62%). Compared to a high income/high drinking category, the lightest drinkers with a low income (adjusted odds ratio AOR = 1.78, 95% confidence intervals CI 1.38-2.30) or medium income (AOR = 1.88, CI 1.47-2.41) were most likely to be lower price elastic. Females were more likely than males to be lower price elastic (65% vs 57%) while the reverse was true for complete elasticity (20% vs 26%, P price of alcohol reduces consumption, and one in five of the surveyed population agreed; more work is required to increase this agreement to achieve public support for policy change. Such policy should also recognise that alcohol is an addictive drug, and the population may be prepared to pay more to drink the amount they now feel they need.

Participatory Irrigation Management and Irrigation Water Use Efficiency in Maize Production: Evidence from Zhangye City, Northwestern China

Directory of Open Access Journals (Sweden)

Qing Zhou

2017-10-01

Full Text Available Water has become increasingly scarce in northwestern China due to climate change, economic growth and burgeoning population. Improving agriculture water use efficiency is of strategic significance in promoting socio-economic water productivity for arid and semi-arid inland river basins. Based on the household-level data collected in Zhangye City, which is located in the middle reaches of Heihe River Basin (HRB in northwestern China, irrigation water use efficiency (IWUE of maize is estimated based on stochastic frontier analysis. The impacts of influential factors, especially the participatory irrigation management (PIM through water user associations (WUAs, on IWUE were further examined. Results show that the estimated average Technical efficiency (TE and IWUE of maize production are 0.74 and 0.24, respectively. The participation level in irrigation management is very low, with only 40% of the respondents participating in WUA meetings. In addition, most have a relatively superficial understanding of the roles and management scheme of WUAs. Empirical results show that though significantly positive, the magnitude of the impact of PIM on IWUE is relatively small. Households that participated in WUA meetings achieved only 0.002% higher IWUEs than those have never participated in. WUAs are not operating with their designed objectives. Consequently, reform of the traditional management form of WUAs to make them more transparent, fair, and extensively participated in among farmers is in urgently need. In addition, we also find that water price, source of irrigation water, irrigation technology adoption and famers’ education level and farming experience also have significant positive impacts on IWUE.

Testing the Limits of the Price Elasticity of Potential Students at Colleges and Universities: Has the Increased Direct Cost to the Student Begun to Drive down Higher Education Enrolment?

Science.gov (United States)

Fincher, Mark; Katsinas, Stephen

2017-01-01

Higher education enrolment has long been known to rise and fall counter to the current economic situation. This counter-cyclical enrolment response represents an economic principle where a price-elastic consumer is more likely make a consumption choice when another valuable use of resources is not available. Higher unemployment has historically…

An Airline-Based Multilevel Analysis of Airfare Elasticity for Passenger Demand

Science.gov (United States)

Castelli, Lorenzo; Ukovich, Walter; Pesenti, Raffaele

2003-01-01

Price elasticity of passenger demand for a specific airline is estimated. The main drivers affecting passenger demand for air transportation are identified. First, an Ordinary Least Squares regression analysis is performed. Then, a multilevel analysis-based methodology to investigate the pattern of variation of price elasticity of demand among the various routes of the airline under study is proposed. The experienced daily passenger demands on each fare-class are grouped for each considered route. 9 routes were studied for the months of February and May in years from 1999 to 2002, and two fare-classes were defined (business and economy). The analysis has revealed that the airfare elasticity of passenger demand significantly varies among the different routes of the airline.

Effect of Deficit irrigation on the Productivity of Processing Potato

International Nuclear Information System (INIS)

Darwish, T.M.; Atallah, T.W.

2003-01-01

The area under potatoes in Lebanon has extended to over 15.000 ha to form 17% of irrigated arable land. More farmers rely on processing varieties for prices and marketing reasons. Studies focused so far on irrigation and fertilization of table potatoes. The current recommendations indicate excess N fertilizer input exceeding 600 kg N/ha in the form of compound fertilizers. Potato is irrigated with macro sprinklers with a water input reaching 850 mm/season. Water mismanagement and shortage eventually influence the yield quantity and quality of processing potatoes. Therefore, deficit irrigation is an important water saving tool regarding the increasing pressure on limited water resources in the dry areas. Information on potato response to water stress imposed at different crop stages is available. The aim of this paper is to study the impact of continuous deficit irrigation imposed from the stage of maximum plant development-flowering stage until physiological maturity on the performance of processing potato (Santana) and water and fertilizer use efficiency. Fertilizer placement and irrigation were done through fertigation using drip system. A neutron probe was used to assess water consumption from the soil. The 15 N methodology was used to follow the N recovery as affected by water deficit

Reforming residential electricity tariff in China: Block tariffs pricing approach

International Nuclear Information System (INIS)

Sun, Chuanwang; Lin, Boqiang

2013-01-01

The Chinese households that make up approximately a quarter of world households are facing a residential power tariff reform in which a rising block tariff structure will be implemented, and this tariff mechanism is widely used around the world. The basic principle of the structure is to assign a higher price for higher income consumers with low price elasticity of power demand. To capture the non-linear effects of price and income on elasticities, we set up a translog demand model. The empirical findings indicate that the higher income consumers are less sensitive than those with lower income to price changes. We further put forward three proposals of Chinese residential electricity tariffs. Compared to a flat tariff, the reasonable block tariff structure generates more efficient allocation of cross-subsidies, better incentives for raising the efficiency of electricity usage and reducing emissions from power generation, which also supports the living standards of low income households. - Highlights: • We design a rising block tariff structure of residential electricity in China. • We set up a translog demand model to find the non-linear effects on elasticities. • The higher income groups are less sensitive to price changes. • Block tariff structure generates more efficient allocation of cross-subsidies. • Block tariff structure supports the living standards of low income households

Principles, effects and problems of differential power pricing policy for energy intensive industries in China

International Nuclear Information System (INIS)

Lin, Boqiang; Liu, Jianghua

2011-01-01

The Chinese government canceled the preferential power pricing policies for energy intensive industries and imposed a reverse differential pricing policy in order to promote energy efficiency and the adjustment and upgrading of the industrial structure. This article analyzes the principles of China's differential power pricing policy, the externalities of energy and the modified Ramsey pricing rule, and also points out the policy implications of China's differential power pricing policy. In our samples, we investigate eight power intensive products in the Henan province with respect to their power consumption per unit (power intensity), electricity cost, total cost, the electricity tariff and profit, in order to test the effects of the differential power pricing policy. The results show that the primary effect of the differential power pricing policy is that enterprises decrease their total costs and improve their productive efficiencies in advance, in anticipating a higher electricity tariff. -- Research highlights: → The article suggests a modified Ramsey pricing model where demand elasticity is replaced by elasticity of energy consumption and polluting elasticity to internalize the negative externality of high energy intensive industry. → The article assesses the effects of differential pricing policy through on-site survey of high energy intensive industries in Henan province and analyzes the reasons behind those effects. → The article presents the lessons and policy implications of implementing differential pricing policy aimed at energy conservation and emission reduction.

A Note on the Teaching of Arc Elasticity.

Science.gov (United States)

Seldon, James R.

1986-01-01

Maintains that the Aba P. Lerner alternative for calculating arc elasticity is superior to the commonly used mean prices and quantities method typically used in intermediate microeconomics courses. (JDH)

An analysis of gasoline demand elasticities at the national and local levels in Mexico

International Nuclear Information System (INIS)

Crotte, Amado; Noland, Robert B.; Graham, Daniel J.

2010-01-01

The majority of evidence on gasoline demand elasticities is derived from models based on national data. Since the largest growth in population is now taking place in cities in the developing world it is important that we understand whether this national evidence is applicable to demand conditions at the local level. The aim of this paper is to estimate and compare gasoline per vehicle demand elasticities at the national and local levels in Mexico. National elasticities with respect to price, income, vehicle stock and metro fares are estimated using both a time series cointegration model and a panel GMM model for Mexican states. Estimates for Mexico City are derived by modifying national estimates according to mode shares as suggested by, and by estimating a panel Within Groups model with data aggregated by borough. Although all models agree on the sign of the elasticities the magnitudes differ greatly. Elasticities change over time and differ between the national and local levels, with smaller price responses in Mexico City. In general, price elasticities are smaller than those reported in the gasoline demand surveys, a pattern previously found in developing countries. The fact that income and vehicle stock elasticities increase over time may suggest that vehicles are being used more intensively in recent years and that Mexico City residents are purchasing larger vehicles. Elasticities with respect to metro fares are negligible, which suggests little substitution between modes. Finally, the fact that fuel efficiency elasticities are smaller than vehicle stock elasticities suggests that vehicle stock size, rather than its composition, has a larger impact on gasoline consumption in Mexico City. (author)

An analysis of gasoline demand elasticities at the national and local levels in Mexico

Energy Technology Data Exchange (ETDEWEB)

Crotte, Amado [Mexican Ministry of Communications and Transport, Mexico City (Mexico); Noland, Robert B. [Alan M. Voorhees Transportation Center, E. J. Bloustein School of Planning and Public Policy, Rutgers University, New Brunswick, NJ 08901 (United States); Graham, Daniel J. [Centre for Transport Studies, Department of Civil and Environmental Engineering, Imperial College London, SW7 2AZ London (United Kingdom)

2010-08-15

The majority of evidence on gasoline demand elasticities is derived from models based on national data. Since the largest growth in population is now taking place in cities in the developing world it is important that we understand whether this national evidence is applicable to demand conditions at the local level. The aim of this paper is to estimate and compare gasoline per vehicle demand elasticities at the national and local levels in Mexico. National elasticities with respect to price, income, vehicle stock and metro fares are estimated using both a time series cointegration model and a panel GMM model for Mexican states. Estimates for Mexico City are derived by modifying national estimates according to mode shares as suggested by, and by estimating a panel Within Groups model with data aggregated by borough. Although all models agree on the sign of the elasticities the magnitudes differ greatly. Elasticities change over time and differ between the national and local levels, with smaller price responses in Mexico City. In general, price elasticities are smaller than those reported in the gasoline demand surveys, a pattern previously found in developing countries. The fact that income and vehicle stock elasticities increase over time may suggest that vehicles are being used more intensively in recent years and that Mexico City residents are purchasing larger vehicles. Elasticities with respect to metro fares are negligible, which suggests little substitution between modes. Finally, the fact that fuel efficiency elasticities are smaller than vehicle stock elasticities suggests that vehicle stock size, rather than its composition, has a larger impact on gasoline consumption in Mexico City. (author)

Elasticities for U.S. Wheat Food Use by Class

OpenAIRE

Marsh, Thomas L.

2003-01-01

We conceptualize wheat for food use as an input into flour production and derive demand functions to quantify price responsiveness and economic substitutability across wheat classes. Cost, price, and substitution elasticities are estimated for hard red winter, hard red spring, soft red wheat, soft white winter, and durum wheat. In general, hard red winter and spring wheat varieties are much more responsive to their own price than are soft wheat varieties and durum wheat. Morishima elasticitie...

The elasticity of drugs demand in Colombia’s pharmaceutical market

Directory of Open Access Journals (Sweden)

Johanna Vásquez Velásquez

2013-06-01

Full Text Available Based on a dynamic specification of the AIDS model arisen from cointegration techniques, this research estimated the elasticity of the intra-molecular, brand and generic demand for three tracer conditions: essential hypertension, diabetes and hyperlipidemia both in the non-profit and private Colombian market. The estimate of the intra-molecular demand elasticity allows us to conclude that both brand-name and generic drugs are inelastic to price changes, they are luxury goods according to expenditure elasticity and intra-molecular replacement seems to exist due to the elasticity of substitution.

Simple Economics of the Price-Setting Newsvendor Problem

OpenAIRE

Michael Salinger; Miguel Ampudia

2011-01-01

The Lerner relationship linking the profit-maximizing price to marginal cost and the elasticity of demand generalizes to the price-setting newsvendor, and the result resolves the puzzle over the different effects of additive and multiplicative uncertainty on the solution. Multiplicative uncertainty increases the optimal price because it increases the marginal cost of a unit sold and does not affect the markup factor. Additive uncertainty has no effect on the marginal cost of a unit sold and l...

Economic Dynamics of the German Hog-Price Cycle

Directory of Open Access Journals (Sweden)

Ernst Berg

2015-06-01

Full Text Available We investigated the economic dynamics of the German hog-price cycle with an innovative ‘diagnostic’ modeling approach. Hog-price cycles are conventionally modeled stochastically—most recently as randomly-shifting sinusoidal oscillations. Alternatively, we applied Nonlinear Time Series analysis to empirically reconstruct a deterministic, low-dimensional, and nonlinear attractor from observed hog prices. We next formulated a structural (explanatory model of the pork industry to synthesize the empirical hog-price attractor. Model simulations demonstrate that low price-elasticity of demand contributes to aperiodic price cycling – a well know result – and further reveal two other important driving factors: investment irreversibility (caused by high specificity of technology, and liquidity-driven investment behavior of German farmers.

Regional Differences in the Price-Elasticity of Demand for Energy

Energy Technology Data Exchange (ETDEWEB)

Bernstein, M. A.; Griffin, J.

2006-02-01

At the request of the National Renewable Energy Laboratory (NREL), the RAND Corporation examined the relationship between energy demand and energy prices with the focus on whether the relationships between demand and price differ if these are examined at different levels of data resolution. In this case, RAND compares national, regional, state, and electric utility levels of data resolution. This study is intended as a first step in helping NREL understand the impact that spatial disaggregation of data can have on estimating the impacts of their programs. This report should be useful to analysts in NREL and other national laboratories, as well as to policy nationals at the national level. It may help them understand the complex relationships between demand and price and how these might vary across different locations in the United States.

The Big Drink Debate: perceptions of the impact of price on alcohol consumption from a large scale cross-sectional convenience survey in north west England

Directory of Open Access Journals (Sweden)

Briant Linford

2011-08-01

Full Text Available Abstract Background A large-scale survey was conducted in 2008 in north west England, a region with high levels of alcohol-related harm, during a regional 'Big Drink Debate' campaign. The aim of this paper is to explore perceptions of how alcohol consumption would change if alcohol prices were to increase or decrease. Methods A convenience survey of residents (≥ 18 years of north west England measured demographics, income, alcohol consumption in previous week, and opinions on drinking behaviour under two pricing conditions: low prices and discounts and increased alcohol prices (either 'decrease', 'no change' or 'increase'. Multinomial logistic regression used three outcomes: 'completely elastic' (consider that lower prices increase drinking and higher prices decrease drinking; 'lower price elastic' (lower prices increase drinking, higher prices have no effect; and 'price inelastic' (no change for either. Results Of 22,780 drinkers surveyed, 80.3% considered lower alcohol prices and discounts would increase alcohol consumption, while 22.1% thought raising prices would decrease consumption, making lower price elasticity only (i.e. lower prices increase drinking, higher prices have no effect the most common outcome (62%. Compared to a high income/high drinking category, the lightest drinkers with a low income (adjusted odds ratio AOR = 1.78, 95% confidence intervals CI 1.38-2.30 or medium income (AOR = 1.88, CI 1.47-2.41 were most likely to be lower price elastic. Females were more likely than males to be lower price elastic (65% vs 57% while the reverse was true for complete elasticity (20% vs 26%, P Conclusions Lower pricing increases alcohol consumption, and the alcohol industry's continued focus on discounting sales encourages higher drinking levels. International evidence suggests increasing the price of alcohol reduces consumption, and one in five of the surveyed population agreed; more work is required to increase this agreement to achieve

Sugary beverage taxation in South Africa: Household expenditure, demand system elasticities, and policy implications.

Science.gov (United States)

Stacey, Nicholas; Tugendhaft, Aviva; Hofman, Karen

2017-12-01

South Africa faces a severe and growing obesity epidemic. Obesity and its co-morbidities raise public and private expenditures on healthcare. Sugary beverages are heavily consumed in South Africa and are linked to the onset of overweight and obesity. Excise taxation of sugary beverages has been proposed and adopted in other settings as a means to reduce harms from their consumption. A tax on the sugar content of non-alcoholic beverages has been proposed for implementation in South Africa, however, the public health effects and revenue raising potential of this measure hinges on estimates of the targeted beverages own- and cross-price elasticities. This study applies demand system methods by combining expenditure survey data and sub-national price data to provide the first estimates of price and expenditure elasticities for categories of soft drinks that would be subject to South Africa's proposed sugary beverage tax. The results suggest that demand for these products is sufficiently price-elastic such that a significant reduction in consumption may result from a tax. Copyright © 2017 The Author(s). Published by Elsevier Inc. All rights reserved.

Is response to price equal for those with higher alcohol consumption?

Science.gov (United States)

Byrnes, Joshua; Shakeshaft, Anthony; Petrie, Dennis; Doran, Christopher M

2016-01-01

To determine if taxation policies that increase the price of alcohol differentially reduce alcohol consumption for heavy drinkers in Australia. A two-part demand model for alcohol consumption is used to determine the price elasticity of alcohol. Quantile regression is used to determine the price elasticity estimates for various levels of consumption. The study uses Australian data collected by the National Drug Strategy Household Survey for the years 2001, 2004 and 2007. Measures of individual annual alcohol consumption were derived from three waves of the National Drug Strategy Household Survey; alcohol prices were taken from market research reports. For the overall population of drinkers, a 1% increase in the price of alcohol was associated with a 0.96% (95% CI -0.35%, -1.57%) reduction in alcohol consumption. For those in the highest 10% of drinkers by average amount consumed, a 1% increase in the price of alcohol was associated with a 1.26% (95% CI 0.82%, 1.70%) reduction in consumption. Within Australia, policies that increase the price of alcohol are about equally effective in relative terms for reducing alcohol consumption both for the general population and among those who drink heavily.

Washington biofuel feedstock crop supply under output price and quantity uncertainty

International Nuclear Information System (INIS)

Zheng Qiujie; Shumway, C. Richard

2012-01-01

Subsidized development of an in-state biofuels industry has received some political support in the state of Washington, USA. Utilizing in-state feedstock supplies could be an efficient way to stimulate biofuel industries and the local economy. In this paper we estimate supply under output price and quantity uncertainty for major biofuel feedstock crops in Washington. Farmers are expected to be risk averse and maximize the utility of profit and uncertainty. We estimate very large Washington price elasticities for corn and sugar beets but a small price elasticity for a third potential feedstock, canola. Even with the large price elasticities for two potential feedstocks, their current and historical production levels in the state are so low that unrealistically large incentives would likely be needed to obtain sufficient feedstock supply for a Washington biofuel industry. Based on our examination of state and regional data, we find low likelihood that a Washington biofuels industry will develop in the near future primarily using within-state biofuel feedstock crops. - Highlights: ► Within-state feedstock crop supplies insufficient for Washington biofuel industry. ► Potential Washington corn and sugar beet supplies very responsive to price changes. ► Feedstock supplies more responsive to higher expected profit than lower risk. ► R and D for conversion of waste cellulosic feedstocks is potentially important policy.

OPEC's production under fluctuating oil prices. Further test of the target revenue theory

International Nuclear Information System (INIS)

Ramcharran, H.

2001-01-01

Oil production cutbacks in recent years by OPEC members to stabilize price and to increase revenues warrant further empirical verification of the target revenue theory (TRT). We estimate a modified version of Griffin (1985) target revenue model using data from 1973 to 2000. The sample period, unlike previous investigations, includes phases of both price increase (1970s) and price decrease (1980s-1990s), thus providing a better framework for examining production behavior. The results, like the earlier study, are not supportive of the strict version of the TRT, however, evidence (negative and significant elasticity of supply) of the partial version are substantiated. Further empirical estimates do not support the competitive pricing model, hypothesizing a positive elasticity of supply. OPEC's loss of market share and the drop in the share of oil-based energy should signal an adjustment in pricing and production strategies

Demand Estimation for Irrigation Water in the Moroccan Drâa Valley using Contingent Valuation

OpenAIRE

Storm, Hugo; Heckelei, Thomas; Heidecke, Claudia

2010-01-01

Irrigation water management is crucial for agricultural production and livelihood security in Morocco as in many other parts of the world. For the implementation of an effective water management knowledge about farmers’ irrigation water demand is crucial to assess demand reactions of a water pricing policy, to establish a cost-benefit analysis of water supply investments or to determine the optimal water allocation between different users. Previously used econometric methods providing this in...

The effects of residential real-time pricing contracts on transco loads, pricing, and profitability: Simulations using the N-ABLE trademark agent-based model

International Nuclear Information System (INIS)

Ehlen, Mark A.; Scholand, Andrew J.; Stamber, Kevin L.

2007-01-01

An agent-based model is constructed in which a demand aggregator sells both uniform-price and real-time price (RTP) contracts to households as means for adding price elasticity in residential power use sectors, particularly during peak-price hours of the day. Simulations suggest that RTP contracts help a demand aggregator (1) shift its long-term contracts toward off-peak hours, thereby reducing its cost of power and (2) increase its short-run profits if it is one of the first aggregators to have large numbers of RTP contracts; but (3) create susceptibilities to short-term market demand and price volatilities. (author)

Food security, irrigation, climate change, and water scarcity in India

Science.gov (United States)

Hertel, T. W.; Taheripour, F.; Gopalakrishnan, B. N.; Sahin, S.; Escurra, J.

2015-12-01

This paper uses an advanced CGE model (Taheripour et al., 2013) coupled with hydrological projections of future water scarcity and biophysical data on likely crop yields under climate change to examine how water scarcity, climate change, and trade jointly alter land use changes across the Indian subcontinent. Climate shocks to rainfed and irrigated yields in 2030 are based on the p-DSSAT crop model, RCP 2.6, as reported under the AgMIP project (Rosenzweig et al., 2013), accessed through GEOSHARE (Villoria et al, 2014). Results show that, when water scarcity is ignored, irrigated areas grow in the wake of climate change as the returns to irrigation rise faster than for rainfed uses of land within a given agro-ecological zone. When non-agricultural competition for future water use, as well as anticipated supply side limitations are brought into play (Rosegrant et al., 2013), the opportunity cost of water rises across all river basins, with the increase ranging from 12% (Luni) to 44% (Brahmaputra). As a consequence, irrigated crop production is curtailed in most regions (Figure 1), with the largest reductions coming in the most water intensive crops, namely rice and wheat. By reducing irrigated area, which tends to have much higher yields, the combined effects of water scarcity and climate impacts require an increase in total cropped area, which rises by about 240,000 ha. The majority of this area expansion occurs in the Ganges, Indus, and Brahmari river basins. Overall crop output falls by about 2 billion, relative to the 2030 baseline, with imports rising by about 570 million. The combined effects of climate change and water scarcity for irrigation also have macro-economic consequences, resulting in a 0.28% reduction in GDP and an increase in the consumer price index by about 0.4% in 2030, compared the baseline. The national welfare impact on India amounts to roughly 3 billion (at 2007 prices) in 2030. Assuming a 3% social discount rate, the net present value of the

Aspects of Price Discrimination in the Monopoly

Directory of Open Access Journals (Sweden)

Catalin Angelo Ioan

2012-06-01

Full Text Available The analysis allowed the determination in general of the consumer’s surplus or of the manufacturer’s surpluss in the case of monopoly and the determination of the allocative inefficiency in relation to the situation of perfect competition. Also, we broached the price discrimination of third order, analyzing, in terms of goods elasticities, the opportunity to separate prices in the conditions of differences existing between groups of firms.

Aspects of Price Discrimination in the Monopoly

OpenAIRE

Catalin Angelo Ioan; Gina Ioan

2012-01-01

The analysis allowed the determination in general of the consumer’s surplus or of the manufacturer’s surpluss in the case of monopoly and the determination of the allocative inefficiency in relation to the situation of perfect competition. Also, we broached the price discrimination of third order, analyzing, in terms of goods elasticities, the opportunity to separate prices in the conditions of differences existing between groups of firms.

Derivative markets, speculation and oil prices

International Nuclear Information System (INIS)

Babusiaux, D.; Lasserre, F.; Pierru, A.

2010-01-01

Recent movements in oil prices have been ascribed by a number of analysts and political leaders not to market fundamentals but to the speculative positions taken by financial investors in derivatives markets. Various economists including Nobel Prize Paul Krugman believe however that the constitution of stocks is a necessary element for speculation, a feature that was not very evident during the sudden price increase in 2008; but these points of view are not entirely incompatible. Various explanations can be put forward, among which the most important is demand inertia. On the very short run, demand price elasticity is significantly lower than that usually calculated for the short term, which can significantly reduce the impact - on stocks - of a temporary price increase provoked by financial investors' behavior. (authors)

Experimental Analysis on Autonomic Strategies for Cloud Elasticity

OpenAIRE

Dupont , Simon; Lejeune , Jonathan; Alvares , Frederico; Ledoux , Thomas

2015-01-01

International audience; In spite of the indubitable advantages of elasticity in Cloud infrastructures, some technical and conceptual limitations are still to be considered. For instance , resource start up time is generally too long to react to unexpected workload spikes. Also, the billing cycles' granularity of existing pricing models may incur consumers to suffer from partial usage waste. We advocate that the software layer can take part in the elasticity process as the overhead of software...

Analyzing alternative policy instruments for the irrigation sector : an assessment of the potential for water market development in the Chishtian Sub-division, Pakistan

NARCIS (Netherlands)

Strosser, P.

1997-01-01

The increasing scarcity of water and financial resources has made the economic dimension of water an important element of irrigation sector policies. Water pricing is the means traditionally used to incorporate economic issues into irrigation sector policies. More recently, water markets

Petroleum’s Price Transmission and Imported Demand for Crude Oil in Thailand

OpenAIRE

Papusson Chaiwat; Nantarat Tangvitoontham

2014-01-01

The study of the petroleum price structures in Thailand reveals that diesel is the important fuel because it influences inflation and productions’ costs. Government wants to keep diesel’s price stability; meanwhile, it is less control in gasohol and petrol prices. These prices are normally higher than diesel’s price in order to support the renewable energy and reduce the consumption behaviors. Real price elasticity of imported crude oil in short run is insignificant but in long run is about 0...

How market structure drives commodity prices

Science.gov (United States)

Li, Bin; Wong, K. Y. Michael; Chan, Amos H. M.; So, Tsz Yan; Heimonen, Hermanni; Wei, Junyi; Saad, David

2017-11-01

We introduce an agent-based model, in which agents set their prices to maximize profit. At steady state the market self-organizes into three groups: excess producers, consumers and balanced agents, with prices determined by their own resource level and a couple of macroscopic parameters that emerge naturally from the analysis, akin to mean-field parameters in statistical mechanics. When resources are scarce prices rise sharply below a turning point that marks the disappearance of excess producers. To compare the model with real empirical data, we study the relationship between commodity prices and stock-to-use ratios in a range of commodities such as agricultural products and metals. By introducing an elasticity parameter to mitigate noise and long-term changes in commodities data, we confirm the trend of rising prices, provide evidence for turning points, and indicate yield points for less essential commodities.

The Impact of Prices and Taxes on the Use of Tobacco Products in Latin America and the Caribbean

Science.gov (United States)

Paraje, Guillermo R.; Chaloupka, Frank J.

2015-01-01

We examined the impact of tobacco prices or taxes on tobacco use in Latin America and Caribbean countries. We searched MEDLINE, EconLit, LILACS, unpublished literature, 6 specialty journals, and reviewed references. We calculated pooled price elasticities using random-effects models. The 32 studies we examined found that cigarette prices have a negative and statistically significant effect on cigarette consumption. A change in price is associated with a less than proportional change in the quantity of cigarettes demanded. In most Latin American countries, own-price elasticity for cigarettes is likely below  −0.5  (pooled elasticities, short-run: −0.31; 95% confidence interval = −0.39, −0.24; long-run: −0.43; 95% CI = −0.51, −0.35). Tax increases effectively reduce cigarette use. Lack of studies using household- or individual-level data limits research’s policy relevance. PMID:25602902

Dynamic Pricing in Cloud Manufacturing Systems under Combined Effects of Consumer Structure, Negotiation, and Demand

Directory of Open Access Journals (Sweden)

Wei Peng

2017-01-01

Full Text Available In this study, we proposed a game-theory based framework to model the dynamic pricing process in the cloud manufacturing (CMfg system. We considered a service provider (SP, a broker agent (BA, and a dynamic service demander (SD population that is composed of price takers and bargainers in this study. The pricing processes under linear demand and constant elasticity demand were modeled, respectively. The combined effects of SD population structure, negotiation, and demand forms on the SP’s and the BA’s equilibrium prices and expected revenues were examined. We found that the SP’s optimal wholesale price, the BA’s optimal reservation price, and posted price all increase with the proportion of price takers under linear demand but decrease with it under constant elasticity demand. We also found that the BA’s optimal reservation price increases with bargainers’ power no matter under what kind of demand. Through analyzing the participants’ revenues, we showed that a dynamic SD population with a high ratio of price takers would benefit the SP and the BA.

Demand driven decision support for efficient water resources allocation in irrigated agriculture

Science.gov (United States)

Schuetze, Niels; Grießbach, Ulrike Ulrike; Röhm, Patric; Stange, Peter; Wagner, Michael; Seidel, Sabine; Werisch, Stefan; Barfus, Klemens

2014-05-01

Due to climate change, extreme weather conditions, such as longer dry spells in the summer months, may have an increasing impact on the agriculture in Saxony (Eastern Germany). For this reason, and, additionally, declining amounts of rainfall during the growing season the use of irrigation will be more important in future in Eastern Germany. To cope with this higher demand of water, a new decision support framework is developed which focuses on an integrated management of both irrigation water supply and demand. For modeling the regional water demand, local (and site-specific) water demand functions are used which are derived from the optimized agronomic response at farms scale. To account for climate variability the agronomic response is represented by stochastic crop water production functions (SCWPF) which provide the estimated yield subject to the minimum amount of irrigation water. These functions take into account the different soil types, crops and stochastically generated climate scenarios. By applying mathematical interpolation and optimization techniques, the SCWPF's are used to compute the water demand considering different constraints, for instance variable and fix costs or the producer price. This generic approach enables the computation for both multiple crops at farm scale as well as of the aggregated response to water pricing at a regional scale for full and deficit irrigation systems. Within the SAPHIR (SAxonian Platform for High Performance Irrigation) project a prototype of a decision support system is developed which helps to evaluate combined water supply and demand management policies for an effective and efficient utilization of water in order to meet future demands. The prototype is implemented as a web-based decision support system and it is based on a service-oriented geo-database architecture.

On the Trade-off Between Real-time Pricing and the Social Acceptability Costs of Demand Response

DEFF Research Database (Denmark)

da Silva, Hendrigo Batista; Santiago, Leonardo

2018-01-01

on the social acceptability costs of implementing demand response programs, and we discuss the key features of implementing a real-time price to energy. Although the literature acknowledges the existence of a social acceptability cost, it does not propose an explicit approach to dealing with this issue. A model...... for investigating the implications of the social acceptability cost is thus introduced and through it, we discuss thoroughly the joint impact of the elasticity and externality parameters on the tariff design of a demand response program. We explore how the increases in elasticity and in externality effects...... influence price changes in such programs and how the social acceptability cost could be reduced as a function of pricing policies. We conclude by discussing the policy design mechanisms in line with demand elasticity and their role in decreasing price variations to cope with the minimum volatility principle...

Elasticity of substitution and anti-dumping decisions

DEFF Research Database (Denmark)

Hansen, Jørgen Drud; Meinen, Philipp; Nielsen, Jørgen Ulff-Møller

2014-01-01

Motivated by a monopolistic competition model with market segmentation and international price discrimination, this paper analyzes whether there is an inverse relation between the elasticity of substitution and final ad valorem anti-dumping duties across products. We test this for 19 countries...

Gasoline prices, gasoline consumption, and new-vehicle fuel economy: Evidence for a large sample of countries

International Nuclear Information System (INIS)

Burke, Paul J.; Nishitateno, Shuhei

2013-01-01

Countries differ considerably in terms of the price drivers pay for gasoline. This paper uses data for 132 countries for the period 1995–2008 to investigate the implications of these differences for the consumption of gasoline for road transport. To address the potential for simultaneity bias, we use both a country's oil reserves and the international crude oil price as instruments for a country's average gasoline pump price. We obtain estimates of the long-run price elasticity of gasoline demand of between − 0.2 and − 0.5. Using newly available data for a sub-sample of 43 countries, we also find that higher gasoline prices induce consumers to substitute to vehicles that are more fuel-efficient, with an estimated elasticity of + 0.2. Despite the small size of our elasticity estimates, there is considerable scope for low-price countries to achieve gasoline savings and vehicle fuel economy improvements via reducing gasoline subsidies and/or increasing gasoline taxes. - Highlights: ► We estimate the determinants of gasoline demand and new-vehicle fuel economy. ► Estimates are for a large sample of countries for the period 1995–2008. ► We instrument for gasoline prices using oil reserves and the world crude oil price. ► Gasoline demand and fuel economy are inelastic with respect to the gasoline price. ► Large energy efficiency gains are possible via higher gasoline prices

A short overview of measures for securing water resources for irrigated crop production

DEFF Research Database (Denmark)

Jensen, Christian Richardt; Ørum, Jens Erik; Pedersen, Søren Marcus

2014-01-01

Agriculture is the main user of limited fresh water resources in the world. Optimisation of agricultural water resources and their use can be obtained by both agronomical and political incentives. Important options are: reduction of the loss of irrigation water in conveyance before it reaches...... of the 'virtual water' principles so that water-rich regions secure food supply to dry regions; reduction in waste of food, feed and biofuel from post-harvest to the end consumer; changing of food composition to less water-consuming products; regulating amount of irrigation water by rationing, subsidies or water...... pricing to support water-saving measures such as use of drip, irrigation scheduling and DI. The potential for water saving for different measures is discussed and estimated. Reduction in waste of food and loss of irrigation water from conveyance source to farm both has a great potential for water saving...

Differential Responses to Food Price Changes by Personal Characteristic: A Systematic Review of Experimental Studies.

Science.gov (United States)

Mizdrak, Anja; Scarborough, Peter; Waterlander, Wilma E; Rayner, Mike

2015-01-01

Fiscal interventions to improve population diet have been recommended for consideration by many organisations including the World Health Organisation and the United Nations and policies such as sugar-sweetened beverage taxes have been implemented at national and sub-national levels. However, concerns have been raised with respect to the differential impact of fiscal interventions on population sub-groups and this remains a barrier to implementation. To examine how personal characteristics (such as socioeconomic status, sex, impulsivity, and income) moderate changes in purchases of targeted foods in response to food and beverage price changes in experimental settings. Systematic review. Online databases (PubMed, EMBASE, Web of Science, EconLit and PsycInfo), reference lists of previous reviews, and additional data from study authors. We included randomised controlled trials where food and beverage prices were manipulated and reported differential effects of the intervention on participant sub-groups defined according to personal characteristics. Where possible, we extracted data to enable the calculation of price elasticities for the target foods by personal characteristic. 8 studies were included in the review. Across studies, the difference in price elasticity varied from 0.02 to 2.43 between groups within the same study. 11 out of the total of 18 comparisons of own-price elasticity estimates by personal characteristic differed by more than 0.2 between groups. Income related factors were the most commonly considered and there was an indication that own-price elasticity estimates do vary by income but the direction of this effect was not clear. Experimental studies provide an opportunity to examine the differential effects of fiscal measures to improve population diets. Patterns in price sensitivity by personal characteristics are complex. General conclusions pertaining to the effects of personal characteristics on price sensitivity are not supported by the

Short- and long-run elasticities in energy demand

International Nuclear Information System (INIS)

Bentzen, J.; Engsted, T.

1993-01-01

Short- and long-run energy demand elasticities are estimated on Danish annual data for 1948-90. Energy consumption, the real price of energy and real GDP appear to be non-stationary variables. Cointegration and error-correction methods are therefore applied. All estimated parameters have the expected signs and magnitudes and no evidence is found of a structural break in energy demand caused by the increases in real energy prices since 1973/74. (author)

A suitable pricing strategy for hybrid maize seed in South Africa

OpenAIRE

2012-01-01

M.B.A. A general increase in price elasticity on farming inputs as well as increasing pressure on South African subsidiaries of international companies makes it important for a well-planned pricing strategy. This is accentuated by the fact that pricing is normally done only once a year in seed companies in South Africa, and customers are unlikely to accept more frequent price changes. The aim of this study is to determine a suitable pricing strategy for hybrid maize seed for Monsanto in So...

Achieving sustainable irrigation water withdrawals: global impacts on food security and land use

Science.gov (United States)

Liu, Jing; Hertel, Thomas W.; Lammers, Richard B.; Prusevich, Alexander; Baldos, Uris Lantz C.; Grogan, Danielle S.; Frolking, Steve

2017-10-01

Unsustainable water use challenges the capacity of water resources to ensure food security and continued growth of the economy. Adaptation policies targeting future water security can easily overlook its interaction with other sustainability metrics and unanticipated local responses to the larger-scale policy interventions. Using a global partial equilibrium grid-resolving model SIMPLE-G, and coupling it with the global Water Balance Model, we simulate the consequences of reducing unsustainable irrigation for food security, land use change, and terrestrial carbon. A variety of future (2050) scenarios are considered that interact irrigation productivity with two policy interventions— inter-basin water transfers and international commodity market integration. We find that pursuing sustainable irrigation may erode other development and environmental goals due to higher food prices and cropland expansion. This results in over 800 000 more undernourished people and 0.87 GtC additional emissions. Faster total factor productivity growth in irrigated sectors will encourage more aggressive irrigation water use in the basins where irrigation vulnerability is expected to be reduced by inter-basin water transfer. By allowing for a systematic comparison of these alternative adaptations to future irrigation vulnerability, the global gridded modeling approach offers unique insights into the multiscale nature of the water scarcity challenge.

A Note on Comparing the Elasticities of Demand Curves.

Science.gov (United States)

Nieswiadomy, Michael

1986-01-01

Demonstrates a simple and useful way to compare the elasticity of demand at each price (or quantity) for different demand curves. The technique is particularly useful for the intermediate microeconomic course. (Author)

Economic analysis of different mulch applications and irrigation programs in apple production

Directory of Open Access Journals (Sweden)

Dilek Karamürsel

2017-12-01

Full Text Available Economic analysis of different mulch materials and irrigation programs on Fuji apple variety grafted onto M9 rootstock was made in this study. Mulch treatments consisted of four different mulch materials including black textile, wheat straw, rose oil processing wastes and no mulch. There were three different irrigation programs for each mulch treatment. Irrigation programs also consisted of three different programs including starting irrigation when available water holding capacity of 20%, 40% and 60% at the effective root zone. Total production costs had fluctuating according to treatments. While rose oil processing and the program starting irrigation when available water holding capacity of 60% at the root zone was used had the lowest total production costs, wheat straw and the program starting irrigation when available water holding capacity of 20% at the root zone was used had the highest values. But, black textile mulch and the program which starting at irrigation when available water holding capacity of 20% at the root zone was used had the lowest unit production cost with 0.39 TL kg-1 highest yield, extra and class I fruits. Furthermore, according to apple marketing prices of 2014, considering yield and fruit quality, the highest gross profit with 51 223 TL ha-1 was obtained from black textile mulch and the program starting irrigation when available water holding capacity of 20% at the root zone was used.

Incentive Elasticity of Demand for Bike/Walk Program

Science.gov (United States)

2008-12-29

The primary objective of this research is to estimate the "incentive" (price) elasticity of demand for using non-motorized transportation (specifically walking and bicycling) to work. Results can be used directly in the formation of local policies to...

Heterogeneity in the response to gasoline prices: Evidence from Pennsylvania and implications for the rebound effect

International Nuclear Information System (INIS)

Gillingham, Kenneth; Jenn, Alan; Azevedo, Inês M.L.

2015-01-01

The consumer response to changing gasoline prices has long interested economists and policymakers, for it has important implications for the effects of gasoline taxation and vehicle energy efficiency policies. This study examines both the elasticity of driving with respect to changing gasoline prices and heterogeneity in this elasticity by geography, the fuel economy of the vehicle, and the age of the vehicle. We use detailed annual vehicle-level emissions inspection test data from Pennsylvania that include odometer readings, inspection zip codes, and extensive vehicle characteristics. We estimate a short-run gasoline price elasticity of driving demand of − 0.10, and find substantial heterogeneity in this responsiveness. The elasticity is largely driven by low fuel economy vehicles, as well as vehicles between 3 and 7 years old. Our findings help reconcile some of the recent literature and provide guidance on the magnitude of the direct rebound effect from light duty vehicle energy efficiency policies.

Fuel consumption: short term and long term price impacts per population type; Consommation de carburant: effets des prix a court et a long termes par type de population

Energy Technology Data Exchange (ETDEWEB)

NONE

2011-07-01

This report presents assessments of the price sensitivity of household fuel consumption. After a literature review on price-elasticity assessments and the use of pseudo-panels, the investigation analyses the deciding factors of the household fuel expense and its evolution between 1985 and 2006. It proposes a short term price-elasticity assessment based on the most recent survey, and also proposes price-elasticity assessments for sub-populations, notably in terms of income level or location (rural or urban areas)

Demand elasticity of oil in Barbados

Energy Technology Data Exchange (ETDEWEB)

Moore, Alvon, E-mail: armoore@centralbank.org.bb [Economist, Central Bank of Barbados, Toms Adams Financial Centre, Bridgetown (Barbados)

2011-06-15

The importation of oil is a significant component of Barbados' imports, rising from 7% of imports in 1998 to over 20% in 2009. This increase has impacted greatly on the level of foreign reserves. As a price-taker, relying entirely on imported oil for our energy needs could prove a continuous drain on the economy. With a view to formulating an appropriate energy policy for Barbados, this paper analyses the demand for oil using monthly data from 1998 to 2009. The paper estimates the elasticities of demand for oil by employing single equation cointegration approach and comparing the results with countries that rely heavily on imported oil and whose policy objective are to alter their energy structure to rely less on imported oil. The results show that the demand for oil imports is price inelastic in the long run. The consumption of oil is responsive to past consumption, prices, income, electricity consumption and the number of appliances imported in the short-run. A policy framework to reduce the use of oil for electricity consumption via alternative energy sources should be considered and the taxation of oil imports given its elasticity is a good source of revenue. - Highlights: > Demand for oil is price inelastic in the long-run (-0.552). > The relationship between oil demand and income is insignificant in the long run. > As electricity consumption increases by 1%, the demand for oil rises by 1.43%. > Need to determine if investments in alternative sources can offset demand for oil. > Investment in alternative resources may be required before gains are realised.

Optimal crop selection and water allocation under limited water supply in irrigation

Science.gov (United States)

Stange, Peter; Grießbach, Ulrike; Schütze, Niels

2015-04-01

Due to climate change, extreme weather conditions such as droughts may have an increasing impact on irrigated agriculture. To cope with limited water resources in irrigation systems, a new decision support framework is developed which focuses on an integrated management of both irrigation water supply and demand at the same time. For modeling the regional water demand, local (and site-specific) water demand functions are used which are derived from optimized agronomic response on farms scale. To account for climate variability the agronomic response is represented by stochastic crop water production functions (SCWPF). These functions take into account different soil types, crops and stochastically generated climate scenarios. The SCWPF's are used to compute the water demand considering different conditions, e.g., variable and fixed costs. This generic approach enables the consideration of both multiple crops at farm scale as well as of the aggregated response to water pricing at a regional scale for full and deficit irrigation systems. Within the SAPHIR (SAxonian Platform for High Performance IRrigation) project a prototype of a decision support system is developed which helps to evaluate combined water supply and demand management policies.

Oil prices and the U.S. business cycle; Le prix du petrole et la conjoncture economique americaine

Energy Technology Data Exchange (ETDEWEB)

Lescaroux, F

2006-06-15

The recent surge in oil prices rakes up old fears and the spectre of stagflation hangs over worldwide economic growth's forecasts. After 30 years of research however analysts still disagree about the influence of oil prices on macro-economic variations and the estimations of the consequences of a costlier barrel differ. As to the United States for example, elasticities between real GDP and oil price form a wide spectrum stretching from a value close to -1% to -11,6%. In this context, we try to identify the potential sources of instability in the oil price-macro-economy relationship in order to explain the width of this range. First we draw attention to the distinction between the effects of an upward disequilibrium and of an upturn in the equilibrium in the oil price series. This distinction lets us share the range of published results in two parts: the elasticities of real American GDP with respect to an upward imbalance and with respect to a rise in the equilibrium price would lie approximately in the ranges extending, respectively, from -1% to -5,5% and from -5% to -11,6%. We direct our work towards the analysis of the consequences of short-run variations in the oil prices on the U.S. business cycle. We identify a set of influences which condition the vulnerability of an economy and then construct an econometric sectoral and non-linear model inspired from Marshall's theory. The simulations conducted let us explain the long-run weakening in the oil price-macro-economy relationship and highlight the prominent part played by imported inflation and monetary policy in the crisis of the 70's and 80's. According to the values of the structural factors in the model and to the shape of the oil price short-run disequilibrium, the elasticities evaluated cover the whole range of published elasticities. (author)

Optimizing Irrigation Water Allocation under Multiple Sources of Uncertainty in an Arid River Basin

Science.gov (United States)

Wei, Y.; Tang, D.; Gao, H.; Ding, Y.

2015-12-01

Population growth and climate change add additional pressures affecting water resources management strategies for meeting demands from different economic sectors. It is especially challenging in arid regions where fresh water is limited. For instance, in the Tailanhe River Basin (Xinjiang, China), a compromise must be made between water suppliers and users during drought years. This study presents a multi-objective irrigation water allocation model to cope with water scarcity in arid river basins. To deal with the uncertainties from multiple sources in the water allocation system (e.g., variations of available water amount, crop yield, crop prices, and water price), the model employs a interval linear programming approach. The multi-objective optimization model developed from this study is characterized by integrating eco-system service theory into water-saving measures. For evaluation purposes, the model is used to construct an optimal allocation system for irrigation areas fed by the Tailan River (Xinjiang Province, China). The objective functions to be optimized are formulated based on these irrigation areas' economic, social, and ecological benefits. The optimal irrigation water allocation plans are made under different hydroclimate conditions (wet year, normal year, and dry year), with multiple sources of uncertainty represented. The modeling tool and results are valuable for advising decision making by the local water authority—and the agricultural community—especially on measures for coping with water scarcity (by incorporating uncertain factors associated with crop production planning).

Price Changes, Resource Adjustments and Rational Expectations

DEFF Research Database (Denmark)

Hoffmann, Kira

This study investigates the relationship between the accuracy of managerial demand expectations, resource adjustment decisions and selling price changes. In line with rational expectation theory, it is argued that managers adjust resources and selling prices differently in response to expected...... that cost elasticity is higher when a demand decrease is expected among companies with similar exposure to demand uncertainty. Overall, this implies that managerial competences in predicting future demand significantly determines firms’ profitability; especially when demand uncertainty is high...

[Study on elasticity of medical service demand at the township level in China].

Science.gov (United States)

Shi, Hong-xing; Lv, Jun; Xie, Yi-ping; Wang, Ying; Jia, Jin-zhong; Chang, Feng-shui; Duan, Lin; Sun, Mei; Wang, Zhi-feng; Hao, Mo

2010-06-18

To find out the economic laws regulating medical service demand in accordance with influencing factors at the township level, thus to provide references for further adjusting the medical service demand reasonably in the future. The model of medical service demand was established to measure the elasticity of demand in 49 township health clinics in 1995, 1999, 2003 and 2007. The price elasticity of outpatient and inpatient demand was stable during the four periods, and the average value was -0.029 and -0.132 respectively; the average value of income elasticity was 0.973 and 0.977, registering a downward trend in general. The medical service demand at the township level is price inelastic, indicating that it is a necessity for rural residents. The downward trend of income elasticity under the influence of some health policies illustrates a lightening in economic burden for medical service demand among rural residents in township health clinics.

Remaking the Elasticity of Consumer Wants

DEFF Research Database (Denmark)

Pallesen, Trine; Jenle, Rasmus Ploug

The paper analyses a smart grid project named EcoGrid, the paper shows how a large market experiment is used to present a solution to the intermittency problem associated with wind power: How to balance supply and demand when electricity production 'follows the wind'? It is shown how electricity...... consumption is sought moved away from periods of peak consumption, and towards periods of peak production, by making consumers sensitive to ongoing changes in price. The study takes a pragmatic stance, applying concepts from the sociology of markets. The paper shows how the price elasticity of a good...

Think Again: Higher Elasticity of Substitution Increases Economic Resilience

OpenAIRE

P. Dumas; S. Hallegatte

2009-01-01

This paper shows that, counter-intuitively, a higher elasticity of substitution in model production function can lead to reduced economic resilience and larger vulnerability to shocks in production factor prices. This result is due to the fact that assuming a higher elasticity of substitution requires a recalibration of the production function parameters to keep the model initial state unchanged. This result has consequences for economic analysis, e.g., on the economic vulnerability to climat...

Pricing in health care organizations. A key component of the marketing mix.

Science.gov (United States)

Marlowe, D

1989-01-01

Pricing is one of the key components of a successful marketing mix. Pricing objectives, strategies, and tactics cannot stand alone, however. To be effective, price must work in harmony with other marketing and management activities. Despite its importance, use of pricing as a management tool is limited in health care compared to other industries. Many factors contribute to this situation, including the structure of the health-care exchange process, limited consumer knowledge, and a limited ability to measure costs. I will provide an overview of pricing information, both within and outside health care. Specifically, we will explore the definition of pricing, nonmonetary pricing, price elasticity, classical pricing theory, and the role of pricing in a health-care setting.

On the value and price-responsiveness of ramp-constrained storage

International Nuclear Information System (INIS)

Faghih, Ali; Roozbehani, Mardavij; Dahleh, Munther A.

2013-01-01

Highlights: • Derived the optimal policy and value function for ramp-constrained storage. • Gave analytic bound on long-term value, and explicit formulas for policy thresholds. • Value of storage saturates as capacity increases, regardless of price volatility. • In expectation, storage can induce high price elasticity near the mean price. • The buy/sell phase transition region in the price-state plane is steep. - Abstract: The primary concerns of this paper are twofold: understanding the value of storage in the presence of ramp constraints and exogenous energy prices, and understanding the implications of the associated optimal storage management policy for qualitative and quantitative characteristics of storage response to real-time prices. The optimal policy, along with the associated finite-horizon time-averaged value of storage, are analytically characterized in this paper. An analytical upper bound on the infinite-horizon time-averaged value of storage is also derived. This bound is valid for any achievable realization of prices when the support of the distribution is fixed, and highlights the dependence of the value of storage on ramp constraints and storage capacity. It is shown that while the value of storage is a non-decreasing function of price volatility, due to the finite ramp rate, the value of storage saturates quickly as the capacity increases, regardless of volatility. To study the implications of the optimal policy, computational experiments are presented that suggest optimal utilization of storage can, in expectation, induce a considerable amount of price elasticity near the average price. Then, a computational framework is presented for characterization of the behavior of storage as a function of price and the state of charge, which illustrates a steep buy/sell phase transition in the price-state plane

Inferred demand and supply elasticities from a comparison of world oil models

International Nuclear Information System (INIS)

Huntington, H.G.

1992-01-01

This paper summarizes the responses of oil supply and demand to prices and income in 11 world oil models that were compared in a recent Energy Modeling Forum (EMF) study. In May 1989, the EMF commenced a study of international oil supplies and demands (hereafter, EMF-11) to compare alternative perspectives on supply and demand issues and how these developments influence the level and direction of world oil prices. In analysing these issues, the EMF-11 working group relied partly upon results from 11 world oil models, using standardized assumptions about oil prices and gross domestic product (GDP). During the study, inferred price elasticities of supply and demand were derived from a comparison of results across different oil price scenarios with the same GDP growth path. Inferred income elasticities of demand were derived from a comparison of results across different economic growth scenarios with the same oil price-path. Together, these estimates summarize several important relationships for understanding oil markets. The first section provides some background on the EMF study and on general trends in the scenarios of interest that help to understand the results. Following sections explain the derivation and qualifications of the inferred estimates, report the results and summarize the key conclusions. (author)

Pricing and hedging of arithmetic Asian options via the Edgeworth series expansion approach

Directory of Open Access Journals (Sweden)

Weiping Li

2016-03-01

Full Text Available In this paper, we derive a pricing formula for arithmetic Asian options by using the Edgeworth series expansion. Our pricing formula consists of a Black-Scholes-Merton type formula and a finite sum with the estimation of the remainder term. Moreover, we present explicitly a method to compute each term in our pricing formula. The hedging formulas (greek letters for the arithmetic Asian options are obtained as well. Our formulas for the long lasting question on pricing and hedging arithmetic Asian options are easy to implement with enough accuracy. Our numerical illustration shows that the arithmetic Asian options worths less than the European options under the standard Black-Scholes assumptions, verifies theoretically that the volatility of the arithmetic average is less than the one of the underlying assets, and also discovers an interesting phenomena that the arithmetic Asian option for large fixed strikes such as stocks has higher volatility (elasticity than the plain European option. However, the elasticity of the arithmetic Asian options for small fixed strikes as trading in currencies and commodity products is much less than the elasticity of the plain European option. These findings are consistent with the ones from the hedgings with respect to the time to expiration, the strike, the present underlying asset price, the interest rate and the volatility.

The impact of price and tobacco control policies on the demand for electronic nicotine delivery systems

Science.gov (United States)

Huang, Jidong; Tauras, John; Chaloupka, Frank J

2014-01-01

Background While much is known about the demand for conventional cigarettes, little is known about the determinants of demand for electronic nicotine delivery systems (ENDS or e-cigarettes). The goal of this study is to estimate the own and cross-price elasticity of demand for e-cigarettes and to examine the impact of cigarette prices and smoke-free policies on e-cigarette sales. Methods Quarterly e-cigarette prices and sales and conventional cigarette prices from 2009 to 2012 were constructed from commercial retail store scanner data from 52 US markets, for food, drug and mass stores, and from 25 markets, for convenience stores. Fixed-effects models were used to estimate the own and cross-price elasticity of demand for e-cigarettes and associations between e-cigarette sales and cigarette prices and smoke-free policies. Results Estimated own price elasticities for disposable e-cigarettes centred around −1.2, while those for reusable e-cigarettes were approximately −1.9. Disposable e-cigarette sales were higher in markets where reusable e-cigarette prices were higher and where less of the population was covered by a comprehensive smoke-free policy. There were no consistent and statistically significant relationships between cigarette prices and e-cigarette sales. Conclusions E-cigarette sales are very responsive to own price changes. Disposable e-cigarettes appear to be substitutes for reusable e-cigarettes. Policies increasing e-cigarette retail prices, such as limiting rebates, discounts and coupons and imposing a tax on e-cigarettes, could potentially lead to significant reductions in e-cigarette sales. Differential tax policies based on product type could lead to substitution between different types of e-cigarettes. PMID:24935898

Accounting for asymmetric price responses and underlying energy demand trends in OECD industrial energy demand

International Nuclear Information System (INIS)

Adeyemi, Olutomi I.; Hunt, Lester C.

2014-01-01

This paper explores the way technical progress and improvements in energy efficiency are captured when modelling OECD industrial energy demand. The industrial sectors of the developed world involve a number of different practices and processes utilising a range of different technologies. Consequently, given the derived demand nature of energy, it is vital when modelling industrial energy demand that the impact of technical progress is appropriately captured. However, the energy economics literature does not give a clear guide on how this can be achieved; one strand suggests that technical progress is ‘endogenous’ via asymmetric price responses whereas another strand suggests that it is ‘exogenous’. More recently, it has been suggested that potentially there is a role for both ‘endogenous’ technical progress and ‘exogenous’ technical progress and consequently the general model should be specified accordingly. This paper therefore attempts to model OECD industrial energy demand using annual time series data over the period 1962–2010 for 15 OECD countries. Using the Structural Time Series Model framework, the general specifications allow for both asymmetric price responses (for technical progress to impact endogenously) and an underlying energy demand trend (for technical progress and other factors to impact exogenously, but in a non-linear way). The results show that almost all of the preferred models for OECD industrial energy demand incorporate both a stochastic underlying energy demand trend and asymmetric price responses. This gives estimated long-run income elasticities in the range of 0.34 to 0.96; estimated long-run price-maximum elasticities in the range of − 0.06 to − 1.22; estimated long-run price-recovery elasticities in the range of 0.00 to − 0.27; and estimated long-run price-cut elasticities in the range of 0.00 to − 0.18. Furthermore, the analysis suggests that when modelling industrial energy demand there is a place for �

Customer response to day-ahead market hourly pricing: Choices and performance

International Nuclear Information System (INIS)

Hopper, Nicole; Goldman, Charles; Bharvirkar, Ranjit; Neenan, Bernie

2006-01-01

Real-time pricing (RTP) has been advocated to address extreme price volatility and market power in electricity markets. This study of Niagara Mohawk Power Corporation's largest customers analyzes their choices and performance in response to day-ahead, default-service RTP. Overall price response is modest: 119 customers are estimated to reduce their peak demand by about 10% at high prices. Manufacturing customers are most responsive with a price elasticity of 0.16, followed by government/education customers (0.11), while commercial/retail, healthcare and public works customers are, at present, relatively unresponsive. Within market segments, individual customer response varies significantly. (author)

Optimized Subsurface Irrigation System: The Future of Sugarcane Irrigation

Directory of Open Access Journals (Sweden)

M. H. J. P. Gunarathna

2018-03-01

Full Text Available Climate change may harm the growth and yield of sugarcane (Saccharum officinarum L. without the introduction of appropriate irrigation facilities. Therefore, new irrigation methods should be developed to maximize water use efficiency and reduce operational costs. OPSIS (optimized subsurface irrigation system is a new solar-powered automatic subsurface irrigation system that creates a phreatic zone below crop roots and relies on capillarity to supply water to the root zone. It is designed for upland crops such as sugarcane. We investigated the performance of OPSIS for irrigating sugarcane and evaluated its performance against sprinkler irrigation under subtropical conditions. We conducted field experiments in Okinawa, Japan, over the period from 2013 to 2016 and took measurements during spring- and summer-planted main crops and two ratoon crops of the spring-planted crop. Compared with sprinkler irrigation, OPSIS produced a significantly higher fresh cane yield, consumed less irrigation water and provided a higher irrigation water use efficiency. We conclude that OPSIS could be adopted as a sustainable solution to sugarcane irrigation in Okinawa and similar environments.

The maximum economic depth of groundwater abstraction for irrigation

Science.gov (United States)

Bierkens, M. F.; Van Beek, L. P.; de Graaf, I. E. M.; Gleeson, T. P.

2017-12-01

Over recent decades, groundwater has become increasingly important for agriculture. Irrigation accounts for 40% of the global food production and its importance is expected to grow further in the near future. Already, about 70% of the globally abstracted water is used for irrigation, and nearly half of that is pumped groundwater. In many irrigated areas where groundwater is the primary source of irrigation water, groundwater abstraction is larger than recharge and we see massive groundwater head decline in these areas. An important question then is: to what maximum depth can groundwater be pumped for it to be still economically recoverable? The objective of this study is therefore to create a global map of the maximum depth of economically recoverable groundwater when used for irrigation. The maximum economic depth is the maximum depth at which revenues are still larger than pumping costs or the maximum depth at which initial investments become too large compared to yearly revenues. To this end we set up a simple economic model where costs of well drilling and the energy costs of pumping, which are a function of well depth and static head depth respectively, are compared with the revenues obtained for the irrigated crops. Parameters for the cost sub-model are obtained from several US-based studies and applied to other countries based on GDP/capita as an index of labour costs. The revenue sub-model is based on gross irrigation water demand calculated with a global hydrological and water resources model, areal coverage of crop types from MIRCA2000 and FAO-based statistics on crop yield and market price. We applied our method to irrigated areas in the world overlying productive aquifers. Estimated maximum economic depths range between 50 and 500 m. Most important factors explaining the maximum economic depth are the dominant crop type in the area and whether or not initial investments in well infrastructure are limiting. In subsequent research, our estimates of

The economic concept of elasticity and their incidence in the Colombian energy market

International Nuclear Information System (INIS)

Perez Bedoya, Edigson

1997-01-01

There are two factors that affect the elasticity, in the first place the readiness of substitutes and in second place, the number of uses that can be given, the more numerous and better they are the substitutes, will be better the elasticity. The goods that have scarce and bad substitutes will Always spread to have small elasticity. The goods with many substitutes will spread to have great elasticity; if the demand is classified in elastic or inelastic it is an important consideration, especially for the energy politics, in the relative thing to market of specific goods, in this case the electric power. If the coefficient of elasticity of the electric power was very elastic, this would imply that an increase in the rate will generate a reduction proportionally in the energy consumption bigger, the companies that they offer or they distribute energy in the case of the electricity for example, they would obtain a smaller entrance for the sale of the electric power kWh. In the practice it is difficult that it happens, for the difficulty of finding substitutes for the electric power, in other words because the elasticity of the electric power demand is inelastic. If the national government establishes a minimum rate above the price of the market balance, the kWh sales, they could decrease, the same as the entrance of the companies of the electric sector, unless the guarantee price is accompanied by minimum quotas of purchase

The potential for greenhouse gases mitigation in household sector of Iran: cases of price reform/efficiency improvement and scenario for 2000-2010

International Nuclear Information System (INIS)

Davoudpour, Hamid; Ahadi, Mohammad Sadegh

2006-01-01

Iran's demographic profile is sharply youth oriented and this upcoming generation's needs for employment and housing, coupled with low-energy efficiency vectors and consumption patterns, has created a constant rise in energy demand and greenhouse gas (GHGs) emissions in the residential sector. Improved energy efficiency as a national policy lynchpin for demand reduction and GHGs mitigation, has become commonplace. OPEC countries however, Iran included, suffer an obvious lack of consumer incentive because of low fuel prices. This study evaluates the twin impacts of price reform and efficiency programs on energy carriers' consumption and GHGs mitigation in the Iranian housing sector. For this purpose, the demand functions for energy carriers, has been developed by econometrics process models. The results reveal that price elasticity for electricity demand in the Constant Elasticity Model for the short-run while the long-run is -0.142 and -0.901, respectively. In the Variable Elasticity Model the 250% increase in electricity rates in the short-run resulted in a price elasticity change from -0.02 to -0.475, hence the 250% increase in electricity pricing for the long-run resulted in the price elasticity change from -0.15 to -2.0. Finally, aided by a Scenario-Based Approach the impact of fuel pricing and efficiency improvement in trends of energy demand and GHGs emission were assessed in a Scenarios Base, developed on two different cases of Business-as-Usual (BAU) and Management. The results indicate that in the BAU case between 2000 and 2011, the energy demand and CO 2 emission increases with an annual growth rate of 7.5% and 6.8%, respectively. Comparatively, if the energy carriers' price is increased to border price and energy efficiency programs are implemented, they will stimulate carriers' demand and CO 2 emissions growth rate decreases to 4.94% and 3.1%, respectively

A Review of Growth Stage Deficit Irrigation Effecting Sticky Maize Production

Directory of Open Access Journals (Sweden)

Ha Bui Manh

2017-06-01

Full Text Available The shortage of water resources influences the future sustainability of sticky Maize (Zea mays L. production. Deficit irrigation (DI - a water management strategy - has gained much attention from scientists because of enhanced water use efficiency (WUE. Nonetheless, in reality, when applying this technique, its impact on yield and economic returns should be considered. Through an analytical literature review, this study examined the effect of growth stage DI on Maize production factors, i.e. yield, WUE, and economic returns. The results revealed that Maize’s WUE could be improved with the lowest reduction in yield as water stress was imposed during the vegetative or maturation growth stages. Therefore, the profitable returns could be reached even if the yield was reduced; however, the economic return was sensitive to commodity prices. The present review addressed that the Maize flexible capacities under growth stage water stress presented an opportunity for the optimization of irrigated water and profit preservation by accurately judging the managing time of irrigation implementation.

Demand elasticity of oil in Barbados

International Nuclear Information System (INIS)

Moore, Alvon

2011-01-01

The importation of oil is a significant component of Barbados' imports, rising from 7% of imports in 1998 to over 20% in 2009. This increase has impacted greatly on the level of foreign reserves. As a price-taker, relying entirely on imported oil for our energy needs could prove a continuous drain on the economy. With a view to formulating an appropriate energy policy for Barbados, this paper analyses the demand for oil using monthly data from 1998 to 2009. The paper estimates the elasticities of demand for oil by employing single equation cointegration approach and comparing the results with countries that rely heavily on imported oil and whose policy objective are to alter their energy structure to rely less on imported oil. The results show that the demand for oil imports is price inelastic in the long run. The consumption of oil is responsive to past consumption, prices, income, electricity consumption and the number of appliances imported in the short-run. A policy framework to reduce the use of oil for electricity consumption via alternative energy sources should be considered and the taxation of oil imports given its elasticity is a good source of revenue. - Highlights: → Demand for oil is price inelastic in the long-run (-0.552). → The relationship between oil demand and income is insignificant in the long run. → As electricity consumption increases by 1%, the demand for oil rises by 1.43%. → Need to determine if investments in alternative sources can offset demand for oil. → Investment in alternative resources may be required before gains are realised.

Availability and Price of High Quality Day Care and Female Employment

DEFF Research Database (Denmark)

Simonsen, Marianne

In this paper I analyse to what degree availability and price of high quality publicly subsidised childcare affects female employment for women living in couples following maternity leave. The results show that unrestricted access to day care has a significantly positive effct on female employment.......The price effect is significantly negative: An increase in the price of child care of C=1 will decrease the female employment with 0.08% corresponding to a price elasticity of −0.17. This effect prevails during the first 12 months after childbirth....

A survey of oil product demand elasticities for developing countries

International Nuclear Information System (INIS)

Dahl, Carol

1994-01-01

As more and more developing countries join the ranks of the rich they will consume both more oil and higher percentage of the lighter products. To satisfy this growing demand oil production and refinery capacity that can provide the right quantity and mix of products must be developed. In a companion piece, Dahl (1993) found the total demand for oil to be price inelastic (-0.34) and income elastic (1.32) These elasticities can give information on the total quantity of oil that might be demanded, the total amount of distillation capacity that might be needed and the overall increases in product prices that might be necessary to choke off demand growth. However, with this overall growth in product demand, the more the shift towards the lighter portion of the barrel, the more complex the refinery and the greater the demand for downstream capital. To provide information on this mix in developing countries in the coming years, this paper surveys the available work on econometric demand elasticities by oil product. (author)

Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design

DEFF Research Database (Denmark)

Simonsen, Marianne; Skipper, Lars; Skipper, Niels

This paper investigates price sensitivity of demand for prescription drugs using drug purchase records for at 20% random sample of the Danish population. We identify price responsiveness by exploiting exogenous variation in prices caused by kinked reimbursement schemes and implement a regression ...... education and income are, however, more responsive to the price. Also, essential drugs that prevent deterioration in health and prolong life have lower associated average price sensitivity....... kink design. Thus, within a unifying framework we uncover price sensitivity for different subpopulations and types of drugs. The results suggest low average price responsiveness with corresponding price elasticities ranging from -0.08 to -0.25, implying that demand is inelastic. Individuals with lower...

The impact of oil price on additions to US proven reserves

International Nuclear Information System (INIS)

Farzin, Y.H.

2001-01-01

Departing from Hotelling's assumption of fixed and known reserves, this paper develops an economic model of additions to proven reserves that explicitly incorporates the effects of expected resource price, cumulative reserves development, and technological progress on reserve additions. The model treats additions to proven oil reserves as output of a production process in which drilling wells is a primary input to transform some of oil-in-place into the economic category of proven reserves. Application of the model to US data for the 1950-1995 period provides strong statistical support for the existence of all the three salient effects. We obtain an estimate of the price elasticity of reserve additions (absent from previous studies) which, although statistically highly significant, is rather small. Using this price elasticity estimate, it is shown that if in the face of steady economic growth, and hence, oil consumption, US oil import dependence is to be kept from rising in the future, ceteris paribus, a steady oil price increase in the range of 1.5-4.5% a year is essential

[The aspects of pricing policy in Azerbaijan pharmaceutical sector].

Science.gov (United States)

Dzhalilova, K I; Alieva, K Ia

2012-01-01

The effect of macro-, middle- and microeconomic factors on price formation in Azerbaijan pharmaceutical market has been studied. Worldwide pharmaceutical leaders have the goals to become leader on the pharmaceutical market of Azerbaijan and maximize their market share. Non-leaders pharmaceutical companies use different strategies of price formation: prime cost plus markup, or price formation on the base of current prices. It was revealed that domestic pharmaceutical market has high demand elasticity. Future market development is related to stimulation of product development, and hard penetration to the market through realization of price formation strategy. Non-state pharmaceutical organizations to achieve the purpose of survive in conditions of high competition should take in to account the factor perceptions of assortment by customers.

Pharmaceutical pricing, price controls, and their effects on pharmaceutical sales and research and development expenditures in the European Union.

Science.gov (United States)

Vogel, Ronald J

2004-08-01

Each country in the European Union (EU) currently employs direct price controls or permutations of direct price controls, such as reference pricing or limitations on returns to capital. Some countries also use volume controls. A new proposal that is being discussed would have all of the countries in the EU adopt uniform pricing for each pharmaceutical. This paper analyzes the economic effects of free-market pricing individual-country price controls, and uniform EU price controls. Microeconomic and mathematical models were used to simulate and predict probable economic outcomes in a comparative static setting. Price controls may be in the form of price ceilings or price floors. Both forms of price control generate deadweight economic losses in the short run and long run. A uniform EU price for each pharmaceutical sold there would have elements of a price ceiling in some of the countries and of a price floor in other countries. The deadweight loss incurred would be a function of the level at which the uniform price was set by the EU and the price elasticity of demand for each pharmaceutical in each country. Economic efficiency is maximized in both the short run and long run when prices are set in freely competitive markets. An additional important dimension of Ramsey pricing within a competitive context is that it generates funds for investment in pharmaceutical research and development, which enhances economic efficiency in the long run.

The impact of price and tobacco control policies on the demand for electronic nicotine delivery systems.

Science.gov (United States)

Huang, Jidong; Tauras, John; Chaloupka, Frank J

2014-07-01

While much is known about the demand for conventional cigarettes, little is known about the determinants of demand for electronic nicotine delivery systems (ENDS or e-cigarettes). The goal of this study is to estimate the own and cross-price elasticity of demand for e-cigarettes and to examine the impact of cigarette prices and smoke-free policies on e-cigarette sales. Quarterly e-cigarette prices and sales and conventional cigarette prices from 2009 to 2012 were constructed from commercial retail store scanner data from 52 U.S. markets, for food, drug and mass stores, and from 25 markets, for convenience stores. Fixed-effects models were used to estimate the own and cross-price elasticity of demand for e-cigarettes and associations between e-cigarette sales and cigarette prices and smoke-free policies. Estimated own price elasticities for disposable e-cigarettes centred around -1.2, while those for reusable e-cigarettes were approximately -1.9. Disposable e-cigarette sales were higher in markets where reusable e-cigarette prices were higher and where less of the population was covered by a comprehensive smoke-free policy. There were no consistent and statistically significant relationships between cigarette prices and e-cigarette sales. E-cigarette sales are very responsive to own price changes. Disposable e-cigarettes appear to be substitutes for reusable e-cigarettes. Policies increasing e-cigarette retail prices, such as limiting rebates, discounts and coupons and imposing a tax on e-cigarettes, could potentially lead to significant reductions in e-cigarette sales. Differential tax policies based on product type could lead to substitution between different types of e-cigarettes. Published by the BMJ Publishing Group Limited. For permission to use (where not already granted under a licence) please go to http://group.bmj.com/group/rights-licensing/permissions.

Odhad cenové elasticity poptávky po ropě

OpenAIRE

Jonák, Ondřej

2009-01-01

Objective of this diploma thesis is estimation of price elasticity of crude oil demand. In order to calculation of such elasticity crude oil demand is estimated with econometrical methods. The choice of suitable model, which sufficiently and accurately models crude oil demand, is initial position of analysis. Consequently, crude oil demand is estimated from market data obtainable from public sources. This estimated model is verified from economic, statistic and econometric point of view. Cons...

Effect of Price Determinants on World Cocoa Prices for Over the Last Three Decades: Error Correction Model (ECM Approach

Directory of Open Access Journals (Sweden)

Lya Aklimawati

2013-12-01

Full Text Available High  volatility  cocoa  price  movement  is  consequenced  by  imbalancing between power demand and power supply in commodity market. World economy expectation and market  liberalization would lead to instability on cocoa prices in  the  international  commerce.  Dynamic  prices  moving  erratically  influence the benefit  of market players, particularly  producers. The aim of this research is  (1  to  estimate  the  empirical  cocoa  prices  model  for  responding  market dynamics and (2 analyze short-term and long-term effect of price determinants variables  on cocoa prices.  This research  was  carried out by  analyzing  annualdata from 1980 to 2011, based on secondary data. Error correction mechanism (ECM  approach was  used  to  estimate the  econometric  model  of  cocoa  price.The  estimation  results  indicated  that  cocoa  price  was  significantly  affected  by exchange rate IDR-USD, world gross domestic product,  world inflation, worldcocoa production, world cocoa consumption, world cocoa stock and Robusta prices at varied significance level from 1 - 10%. All of these variables have a long run equilibrium relationship. In long run effect, world gross domestic product, world  cocoa  consumption  and  world  cocoa  stock  were  elastic  (E  >1,  while other  variables  were  inelastic  (E  <1.  Variables  that  affecting  cocoa  pricesin  short  run  equilibrium  were  exchange  rate  IDR-USD,  world  gross  domestic product,  world  inflation,  world  cocoa  consumption  and  world  cocoa  stock. The  analysis  results  showed  that  world  gross  domestic  product,  world  cocoa consumption  and  world  cocoa  stock  were  elastic  (E  >1  to  cocoa  prices  in short-term.  Whereas,  the  response  of  cocoa  prices  was  inelastic  to  change  of exchange rate IDR-USD and world inflation.Key words: Price

Ramsey prices in the Italian electricity market

International Nuclear Information System (INIS)

Bigerna, Simona; Bollino, Carlo Andrea

2016-01-01

In this paper, we derive optimal zonal prices in the Italian day-ahead electricity market using estimation of a complete system of hourly demand in 2010–2011. In Italy, the hourly equilibrium price for all buyers is computed as a uniform average of supply zonal prices, resulting from market splitting due to line congestion. We model ex-ante individual bids expressed by heterogeneous consumers, which are distinguished by geographical zones. Using empirical estimations, we compute demand elasticity values and new zonal prices, according to a Ramsey optimal scheme. This is a new approach in the wholesale electricity market literature, as previous studies have discussed the relative merit of zonal prices, considering only the issue of line congestion. Our results show that the optimal pricing scheme can improve welfare in the day-ahead Italian electricity market, with respect to both the existing uniform price scheme and the proposal to charge the existing supply zonal prices to the demand side. - Highlights: • We model and estimate the demand of heterogeneous buyers in the electricity market. • Transmission line congestion creates welfare distortions in the market. • We derive optimal Ramsey prices in the Italian day-ahead electricity market. • We compare optimal prices with historical ones showing how to improve welfare.

The effect of methamphetamine and heroin price on polydrug use: A behavioural economics analysis in Sydney, Australia.

Science.gov (United States)

Chalmers, Jenny; Bradford, Deborah; Jones, Craig

2010-09-01

A key aim of supply-side drug law enforcement is to reduce drug use by increasing the retail price of drugs. Since most illicit drug users are polydrug users the effectiveness of this strategy depends on the extent to which drug users reduce their overall consumption of drugs. The literature shows that drug users do reduce their consumption of a drug when its price increases. However the extent of that decrease and the implications for the use of other drugs vary across studies. A sample of 101 Australian methamphetamine users was surveyed using a behavioural economics approach. Participants were given a hypothetical fixed drug budget, presented with a range of drug price lists and asked how many units of each drug they would purchase. Methamphetamine and heroin prices were varied independently across trials. While demand for both methamphetamine and heroin was found to be price elastic, elasticity estimates were influenced by the nature of participants' drug dependence. The group least responsive to changes in methamphetamine price were those dependent only on methamphetamine, while the group most responsive were dependent only on heroin. Similar findings emerged in relation to changes in heroin price. Cross-price elasticity analysis showed limited substitution into other drugs as the price of methamphetamine increased. In contrast, for heroin, there was significant substitution into pharmaceutical opioids and to a lesser extent, benzodiazepines and methamphetamine. However, for the most part, the decreases in methamphetamine or heroin consumption outweighed any substitution into other drugs. The reduction in overall drug consumption and expenditure in response to price increases in heroin and methamphetamine observed in this sample lend support to supply-side enforcement strategies that aim to increase retail drug price. Notably, this analysis highlights the importance of accounting for the nature of users' drug dependence in estimating price responsiveness

Oil prices and the U.S. business cycle; Le prix du petrole et la conjoncture economique americaine

Energy Technology Data Exchange (ETDEWEB)

Lescaroux, F

2006-06-15

The recent surge in oil prices rakes up old fears and the spectre of stagflation hangs over worldwide economic growth's forecasts. After 30 years of research however analysts still disagree about the influence of oil prices on macro-economic variations and the estimations of the consequences of a costlier barrel differ. As to the United States for example, elasticities between real GDP and oil price form a wide spectrum stretching from a value close to -1% to -11,6%. In this context, we try to identify the potential sources of instability in the oil price-macro-economy relationship in order to explain the width of this range. First we draw attention to the distinction between the effects of an upward disequilibrium and of an upturn in the equilibrium in the oil price series. This distinction lets us share the range of published results in two parts: the elasticities of real American GDP with respect to an upward imbalance and with respect to a rise in the equilibrium price would lie approximately in the ranges extending, respectively, from -1% to -5,5% and from -5% to -11,6%. We direct our work towards the analysis of the consequences of short-run variations in the oil prices on the U.S. business cycle. We identify a set of influences which condition the vulnerability of an economy and then construct an econometric sectoral and non-linear model inspired from Marshall's theory. The simulations conducted let us explain the long-run weakening in the oil price-macro-economy relationship and highlight the prominent part played by imported inflation and monetary policy in the crisis of the 70's and 80's. According to the values of the structural factors in the model and to the shape of the oil price short-run disequilibrium, the elasticities evaluated cover the whole range of published elasticities. (author)

Meta-analýza cenové elasticity poptávky po alkoholu

OpenAIRE

Fanta, Nicolas

2014-01-01

The own-price elasticity is considered to be one of the key factors describing the demand for alcohol. There have been many estimates computed by now but only a few studies tried to analyse them. The aim of this meta-analysis is to discover more about the eventual effects that publication bias might have in the alcohol-related literature. The first part describes the various types of elasticities and the methods of estimation. This study is estimating the so called true effect elasticity in o...

Estimating the Price Elasticity of Demand for Cannabis: A Geographical and Crowdsourced Approach || La estimación de la elasticidad en los precios de la demanda de cannabis: un enfoque geográfico y basado en la colaboración abierta distribuida

Directory of Open Access Journals (Sweden)

Halcoussis, Dennis

2017-06-01

Full Text Available Recent legalizations of cannabis at the state level in the United States have given rise to renewed interest in the price elasticity of demand for cannabis and implications for likely state excise and sales tax revenues. We use crowdsourced data on prices, qualities, and consumption of cannabis across regional markets in the United States to estimate the price elasticity of demand for cannabis. We use distances from growing areas to the major markets as a proxy for cost variations. We obtain an estimate of the price elasticity of demand for cannabis of -0.418, which suggests that legalizing and taxing recreational cannabis use would be lucrative for government treasuries. || Las recientes legalizaciones del cannabis a nivel estatal en los Estados Unidos han dado lugar a un renovado interés en la elasticidad en los precios de la demanda de cannabis y sus implicaciones en los ingresos por impuestos estatales y sobre ingresos por ventas. Utilizamos datos en colaboración abierta sobre precios, calidades y consumo de cannabis en los mercados regionales de los Estados Unidos para estimar la elasticidad en los precios de la demanda de cannabis. Utilizamos distancias desde las zonas de cultivo hasta los principales mercados como sustituto de las variaciones de los costos. Se obtiene una estimación de la elasticidad en los precios de la demanda de cannabis de -0,418, lo que sugiere que la legalización y el gravamen del cannabis para uso recreativo sería lucrativo para los erarios públicos.

Evaluating two irrigation controllers under subsurface drip irrigated tomato crop

International Nuclear Information System (INIS)

Al-Ghobari, H.M.; Mohammad, F.S.; El Marazky, M.S.A.

2016-01-01

Smart systems could be used to improve irrigation scheduling and save water under Saudi Arabia’s present water crisis scenario. This study investigated two types of evapotranspiration-based smart irrigation controllers, SmartLine and Hunter Pro-C2, as promising tools for scheduling irrigation and quantifying plants’ water requirements to achieve water savings. The effectiveness of these technologies in reducing the amount of irrigation water was compared with the conventional irrigation scheduling method as a control treatment. The two smart irrigation sensors were used for subsurface irrigation of a tomato crop (cv. Nema) in an arid region. The results showed that the smart controllers significantly reduced the amount of applied water and increased the crop yield. In general, the Hunter Pro-C2 system saved the highest amount of water and produced the highest crop yield, resulting in the highest water irrigation efficiency compared with the SmartLine controller and the traditional irrigation schedule. It can be concluded that the application of advanced scheduling irrigation techniques such as the Hunter controller under arid conditions can realise economic benefits by saving large amounts of irrigation water.

Evaluating two irrigation controllers under subsurface drip irrigated tomato crop

Energy Technology Data Exchange (ETDEWEB)

Al-Ghobari, H.M.; Mohammad, F.S.; El Marazky, M.S.A.

2016-07-01

Smart systems could be used to improve irrigation scheduling and save water under Saudi Arabia’s present water crisis scenario. This study investigated two types of evapotranspiration-based smart irrigation controllers, SmartLine and Hunter Pro-C2, as promising tools for scheduling irrigation and quantifying plants’ water requirements to achieve water savings. The effectiveness of these technologies in reducing the amount of irrigation water was compared with the conventional irrigation scheduling method as a control treatment. The two smart irrigation sensors were used for subsurface irrigation of a tomato crop (cv. Nema) in an arid region. The results showed that the smart controllers significantly reduced the amount of applied water and increased the crop yield. In general, the Hunter Pro-C2 system saved the highest amount of water and produced the highest crop yield, resulting in the highest water irrigation efficiency compared with the SmartLine controller and the traditional irrigation schedule. It can be concluded that the application of advanced scheduling irrigation techniques such as the Hunter controller under arid conditions can realise economic benefits by saving large amounts of irrigation water.

Irrigation Water Value at Small-scale Schemes: Evidence from the North West Province, South Africa

NARCIS (Netherlands)

Speelman, S.; Farolfi, S.; Perret, S.; Haese, D' L.; Haese, D' M.

2008-01-01

Insight into the value of water is essential to support policy decision making about investments in the water sector, efficient allocation of water and water pricing. However, information on irrigation water values at small-scale schemes is scarce and in general little attention is paid to the

DEFICIT IRRIGATION TECHNIQUE FOR REDUCING WATER USE OF TOMATO UNDER POLYTUNNEL CONDITIONS

Directory of Open Access Journals (Sweden)

Sladjana SAVIC

2012-01-01

Full Text Available The aim of paper was to asses the use of regulated deficit irrigation (RDI for production of two tomato cultivars (Cedrico and Abellus in polytunnels in Serbia. RDI plants received 60% of the water that was applied to FI plants and significant saving of water for irrigation and increased in irrigation water use efficiency (IWUE were achieved. Yield data for Cedrico cultivar showed no differences between RDI and FI, while due to the bigger sensitivity to drought, yield of Abellus was reduced under RDI. In general, fruit quality (soluble solids, titrable acidity was sustained or improved in both cultivars under RDI. Economic analyses showed that due to the current low prices of water and electricity in Serbia, the profit increase of Cedrico, similarly to the previously trialed cultivar Amati, was not high under RDI comparing to FI. Reduction of yield and consequent profit for Abellus, indicated that for future commercial growing of tomato under RDI should be used drought resistant cultivars.

The impacts of price responsiveness on strategic equilibrium in competitive electricity markets

Energy Technology Data Exchange (ETDEWEB)

Bompard, Ettore; Ma, Yuchao; Napoli, Roberto [Department of Electrical Engineering, Politecnico di Torino, C.so Duca degli Abruzzi, 24, 10129 Torino (Italy); Abrate, Graziano; Ragazzi, Elena [Ceris-CNR, Via Real Collegio, 30, 10024 Moncalieri (Italy)

2007-06-15

One of the most important aspects that may affect market welfare is that related to the low demand responsiveness to price. This situation may greatly impact the market performance causing low efficiency, high prices and a disproportional allocation of surpluses. The structure of electricity markets is usually oligopolistic; producers may bid prices higher than their marginal costs to the short run wholesale market, inducing outcome deviations from the perfect competitive benchmark. The possibility of gaming the market is amplified in the presence of low demand responsiveness to price. This paper proposes a model to assess the role of demand elasticity in mitigating the effects of supply side strategic bidding behavior. We model the supply side in a conjectural supply function (CSF) framework, which allows incorporation of exogenous changes in demand elasticity and different levels of competition in a given market. The impacts of demand responsiveness on the market performances are assessed through a set of proposed indices that are applied to a model of the Italian market. (author)

The impacts of price responsiveness on strategic equilibrium in competitive electricity markets

International Nuclear Information System (INIS)

Bompard, Ettore; Ma, Yuchao; Napoli, Roberto; Abrate, Graziano; Ragazzi, Elena

2007-01-01

One of the most important aspects that may affect market welfare is that related to the low demand responsiveness to price. This situation may greatly impact the market performance causing low efficiency, high prices and a disproportional allocation of surpluses. The structure of electricity markets is usually oligopolistic; producers may bid prices higher than their marginal costs to the short run wholesale market, inducing outcome deviations from the perfect competitive benchmark. The possibility of gaming the market is amplified in the presence of low demand responsiveness to price. This paper proposes a model to assess the role of demand elasticity in mitigating the effects of supply side strategic bidding behavior. We model the supply side in a conjectural supply function (CSF) framework, which allows incorporation of exogenous changes in demand elasticity and different levels of competition in a given market. The impacts of demand responsiveness on the market performances are assessed through a set of proposed indices that are applied to a model of the Italian market. (author)

Price formation and transmission along the food commodity chain

Directory of Open Access Journals (Sweden)

Ivana Blažková

2012-01-01

Full Text Available The article is focused on analysis of price transmission along the wheat commodity chain in the Czech Republic, with the distinction on wheat products with low value added (wheat flour, respectively high value added (wheat rolls. The degree of vertical price transmission is measured to identify potential market failures, because asymmetric price transmission can be the result of existence of market power within the food commodity chain. The data basis is made up from monthly prices on partial markets of the analyzed commodity chain published by Czech Statistical Office and Ministry of Agriculture of the Czech Republic. The monitored time period is from January 2000 till October 2009. The analysis is based on calculation of the price transmission elasticity coefficient (evaluation of price transmission along the chain and the intensity of dependency of positive and negative inter-market price differences (evaluation whether positive or negative price changes are better transmitted among particular vertical markets. Time lag is tested as well. The assessment of price transmission along the wheat commodity chain confirmed the existence of market power especially on the retail stage and low impact of price changes of farm prices on final consumer food prices.

The effect of rising food prices on food consumption: systematic review with meta-regression.

Science.gov (United States)

Green, Rosemary; Cornelsen, Laura; Dangour, Alan D; Turner, Rachel; Shankar, Bhavani; Mazzocchi, Mario; Smith, Richard D

2013-06-17

To quantify the relation between food prices and the demand for food with specific reference to national and household income levels. Systematic review with meta-regression. Online databases of peer reviewed and grey literature (ISI Web of Science, EconLit, PubMed, Medline, AgEcon, Agricola, Google, Google Scholar, IdeasREPEC, Eldis, USAID, United Nations Food and Agriculture Organization, World Bank, International Food Policy Research Institute), hand searched reference lists, and contact with authors. We included cross sectional, cohort, experimental, and quasi-experimental studies with English abstracts. Eligible studies used nationally representative data from 1990 onwards derived from national aggregate data sources, household surveys, or supermarket and home scanners. The primary outcome extracted from relevant papers was the quantification of the demand for foods in response to changes in food price (own price food elasticities). Descriptive and study design variables were extracted for use as covariates in analysis. We conducted meta-regressions to assess the effect of income levels between and within countries on the strength of the relation between food price and demand, and predicted price elasticities adjusted for differences across studies. 136 studies reporting 3495 own price food elasticities from 162 different countries were identified. Our models predict that increases in the price of all foods result in greater reductions in food consumption in poor countries: in low and high income countries, respectively, a 1% increase in the price of cereals results in reductions in consumption of 0.61% (95% confidence interval 0.56% to 0.66%) and 0.43% (0.36% to 0.48%), and a 1% increase in the price of meat results in reductions in consumption of 0.78% (0.73% to 0.83%) and 0.60% (0.54% to 0.66%). Within all countries, our models predict that poorer households will be the most adversely affected by increases in food prices. Changes in global food prices will

Price elasticity of demand for psychiatric consultation in a Nigerian ...

African Journals Online (AJOL)

Department of Psychiatry, University of Ibadan, University College Hospital, PMB 5116, Ibadan, Nigeria. ... changes on utilization of health services is the Price Elas- ticity of Demand .... World Bank), over 52% of the population earns below.

Teaching Price, Income, and Cross Elasticity of Demand: Another Approach.

Science.gov (United States)

Zahka, William J.

One of the most important, yet difficult concepts to teach in an undergraduate course in intermediate microeconomics is the all-embracing concept of elasticity of demand. This paper details a four part teaching approach developed to make this most important aspect of microeconomic theory more understandable. Part 1 develops the approach for…

Differential responsiveness to cigarette price by education and income among adult urban Chinese smokers: findings from the ITC China Survey.

Science.gov (United States)

Huang, Jidong; Zheng, Rong; Chaloupka, Frank J; Fong, Geoffrey T; Jiang, Yuan

2015-07-01

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. To estimate the conditional cigarette consumption price elasticity among adult urban smokers in China and to examine the differential responses to cigarette price increases among groups with different income and/or educational levels. Multivariate analyses employing the general estimating equations method were conducted using the first three waves of the International Tobacco Control (ITC) China Survey. Analyses based on subsample by education and income were conducted. Conditional cigarette demand price elasticity ranges from -0.12 to -0.14. No differential responses to cigarette price increase were found across education levels. The price elasticity estimates do not differ between high-income smokers and medium-income smokers. Cigarette consumption among low-income smokers did not decrease after a price increase, at least among those who continued to smoke. Relative to other low-income and middle-income countries, cigarette consumption among Chinese adult smokers is not very sensitive to changes in cigarette prices. The total impact of cigarette price increase would be larger if its impact on smoking initiation and cessation, as well as the price-reducing behaviours such as brand switching and trading down, were taken into account. Published by the BMJ Publishing Group Limited. For permission to use (where not already granted under a licence) please go to http://group.bmj.com/group/rights-licensing/permissions.

Childcare Prices and Maternal Employment: a Meta-Analysis

NARCIS (Netherlands)

Akgündüz, Y.E.; Plantenga, J.

2015-01-01

The literature estimates for labor force participation elasticity with regards to child care prices are extensive and varying. While some estimates imply substantial gains from child care subsidies, others find insignif-icant effects. Determining the reasons for the variance in the results and the

Understanding Irrigator Bidding Behavior in Australian Water Markets in Response to Uncertainty

Directory of Open Access Journals (Sweden)

Alec Zuo

2014-11-01

Full Text Available Water markets have been used by Australian irrigators as a way to reduce risk and uncertainty in times of low water allocations and rainfall. However, little is known about how irrigators’ bidding trading behavior in water markets compares to other markets, nor is it known what role uncertainty and a lack of water in a variable and changing climate plays in influencing behavior. This paper studies irrigator behavior in Victorian water markets over a decade (a time period that included a severe drought. In particular, it studies the evidence for price clustering (when water bids/offers end mostly around particular numbers, a common phenomenon present in other established markets. We found that clustering in bid/offer prices in Victorian water allocation markets was influenced by uncertainty and strategic behavior. Water traders evaluate the costs and benefits of clustering and act according to their risk aversion levels. Water market buyer clustering behavior was mostly explained by increased market uncertainty (in particular, hotter and drier conditions, while seller-clustering behavior is mostly explained by strategic behavioral factors which evaluate the costs and benefits of clustering.

Demand for gasoline is more price-inelastic than commonly thought

Czech Academy of Sciences Publication Activity Database

Havránek, T.; Iršová, Z.; Janda, Karel

2012-01-01

Roč. 34, č. 1 (2012), s. 201-207 ISSN 0140-9883 Institutional support: RVO:67985998 Keywords : gasoline demand * price elasticity * publication selection bias Subject RIV: AH - Economics Impact factor: 2.538, year: 2012

Is the demand for alcoholic beverages in developing countries sensitive to price? Evidence from China.

Science.gov (United States)

Tian, Guoqiang; Liu, Feng

2011-06-01

Economic literature in developed countries suggests that demand for alcoholic beverages is sensitive to price, with an estimated price elasticity ranging from -0.38 for beer and -0.7 for liquor. However, few studies have been conducted in developing countries. We employ a large individual-level dataset in China to estimate the effects of price on alcohol demand. Using the data from China Health and Nutrition Survey for the years 1993, 1997, 2000, 2004 and 2006, we estimate two-part models of alcohol demand. Results show the price elasticity is virtually zero for beer and only -0.12 for liquor, which is far smaller than those derived from developed countries. Separate regressions by gender reveals the results are mainly driven by men. The central implication of this study is, while alcohol tax increases can raise government revenue, it alone is not an effective policy to reduce alcohol related problems in China.

THE ROLE OF IRRIGATED FODDER PRODUCTION TO SUPPLEMENT THE DIET OF FATTENING SHEEP BY SMALLHOLDERS IN SOUTHERN ETHIOPIA

Directory of Open Access Journals (Sweden)

Melkamu Bezabih Derseh

2016-12-01

Full Text Available Feed shortage and poor quality of available feeds are major constraints for livestock production in the highlands of Ethiopia. A trial was conducted to assess if producing irrigated oat-vetch fodder during the dry period could adequately supplement the diet of fattening sheep and generate additional income for smallholders. A total of 14 farmers and 70 sheep (5 per farmer were involved in the trial. The farmers supplemented their fattening sheep with 200 g of irrigated oat-vetch fodder per day for about 70 days. The mean daily body weight gain of the fattened sheep ranged from 52 to 110 grams. The partial budget analysis revealed that while farmers with good feeding management could earn an additional income in the range of ETB 55 – 161 per sheep, farmers with the lower rate of weight gain could lose up to ETB 58 per sheep unless purchase and sale prices remained constant. Sheep prices do, however, fluctuate, peaking during major holiday periods occurring during the dry season. Therefore, timing of the fattening period is essential to profitability, and supplemental irrigated fodder production offers smallholders opportunities to produce good quality feed and target favourable markets for fattened animals.

Nonlinear Pricing in Energy and Environmental Markets

Science.gov (United States)

Ito, Koichiro

Consumers Respond to Nonlinear Pricing? Evidence from Household Water Demand" provides similar empirical evidence in residential water markets. In this paper, I exploit variation in residential water pricing in Southern California to examine how consumers respond to nonlinear pricing. Contrary to the standard predictions for nonlinear budget sets, I find no bunching of consumers around the kink points of their nonlinear price schedule. I then explore whether consumers respond to marginal price, expected marginal price, or average price when faced with nonlinear water price schedules. The price schedule of one service area was changed from a linear price schedule to a nonlinear price schedule. This policy change lead to an increase in marginal price and expected marginal price but a decrease in average price for many consumers. Using household-level panel data, I find strong evidence that consumers respond to average price rather than marginal or expected marginal price. Estimates of the short-run price elasticity for the summer and winter months are -.127 and -.097, and estimates of the long-run price elasticity for the summer and winter months are -.203 and -.154. I conclude with "The Effect of Cash Rewards on Energy Conservation: Evidence from a Regression Discontinuity Design" to examine the effect of an alternative form of nonlinear pricing that was developed to provide an explicit financial incentive for conservation. In the summer of 2005, California residents received a 20% discount on their summer electricity bills if they could reduce their electricity consumption by 20% relative to 2004. Nearly all households automatically participated in the program, but the eligibility rule required households to have started their electricity service by a certain cutoff date in 2004. This rule generated an essentially random assignment of the program among households that started their service right before and after the cutoff date. Using household-level monthly billing records

Factors Affecting the Ability of Agriculture to Pay Irrigation-Water Costs

Energy Technology Data Exchange (ETDEWEB)

Hagood, M. A. [Land and Water Development Division, Food and Agriculture Organization of the United Nations, Rome (Italy)

1967-11-15

There are no universally acceptable standard criteria for determining how much agriculture can pay for irrigation water. Justification of cost will depend upon the country's need to develop its soil and water resources for food, for international trade, and for its cumulative effect on other industries in comparison with other possible uses and their over-all contributions to the economy. Social and political conditions often have as much or more influence on development cost decisions than do strictly economic analyses. Many studies indicate that US $0.10/1000 US gal is an upper limit of acceptable costs for developing irrigation water at present economic levels. Under private development and on projects where water users must pay total water costs, methods are available for making feasibility budgets based on present prices. Because of inflation, world food shortage, recessions, future population and other unknown factors, it is hazardous to predict how much farmers or agriculture can pay for irrigation water. Better utilization of water available now offers opportunities for ''developing'' sources at costs much less than those for sources such as sea-water conversion. (author)

Regionally-varying and regionally-uniform electricity pricing policies compared across four usage categories

International Nuclear Information System (INIS)

Cho, Seong-Hoon; Kim, Taeyoung; Kim, Hyun Jae; Park, Kihyun; Roberts, Roland K.

2015-01-01

The objective of our research is to predict how electricity demand varies spatially between status quo regionally-uniform electricity pricing and hypothetical regionally-varying electricity pricing across usage categories. We summarize the empirical results of a case study of electricity demand in South Korea with three key findings and their related implications. First, the price elasticities of electricity demand differ across usage categories. Specifically, electricity demands for manufacturing and retail uses are price inelastic and close to unit elastic, respectively, while those for agricultural and residential uses are not statistically significant. This information is important in designing energy policy, because higher electricity prices could reduce electricity demands for manufacturing and retail uses, resulting in slower growth in those sectors. Second, spatial spillovers in electricity demand vary across uses. Understanding the spatial structure of electricity demand provides useful information to energy policy makers for anticipating changes in demand across regions via regionally-varying electricity pricing for different uses. Third, simulation results suggest that spatial variations among electricity demands by usage category under a regionally-varying electricity-pricing policy differ from those under a regionally-uniform electricity-pricing policy. Differences in spatial changes between the policies provide information for developing a realistic regionally-varying electricity-pricing policy according to usage category. - Highlights: • We compare regionally-varying and regionally-uniform electricity pricing policies. • We summarize empirical results of a case study of electricity demand in South Korea. • We confirm that spatial spillovers in electricity demands vary across different uses. • We find positive spatial spillovers in the manufacturing and residential sectors. • Our methods help policy makers evaluate regionally-varying pricing

Motor fuel prices in Turkey