Elasticity identities:examples and counterexamples

Ferran Sancho

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: In this note, we examine the general validity of long-established identities relating to price elasticities of demand and elasticities of substitution, which have traditionally been assumed to hold. The central finding is that under non-homothetic preferences, these fundamental identities cease to hold, thereby rendering any derived calculations based on them unreliable. Additionally, for scenarios where these identities remain valid, we present their extension to the n-good case.

Keywords: elasticity identities; price elasticity of demand; substitution elasticity (search for similar items in EconPapers)
Pages: 7
Date: 2025-09-03
New Economics Papers: this item is included in nep-eur
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:977.25

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