Estimating short-run (SR) and long-run (LR) demand elasticities of phosphate

Rami Rawashdeh ()
Additional contact information
Rami Rawashdeh: Al-Hussein Bin Talal University

Mineral Economics, 2023, vol. 36, issue 2, No 4, 239-253

Abstract: Abstract Many empirical exercises estimating demand functions are concerned with estimating dynamic effects of price and income changes over time. Researchers are typically interested in getting estimates of both short-run (SR) and long-run (LR) elasticities, along with their standard errors. This study aimed to contribute with estimations of demand elasticities of world phosphate fertilisers. It answered the research question “How world demand of phosphate fertilisers is affected by its own price changes, cross price changes, income changes and other variables?”. Short and long run elasticities are calculated using an economic model in this paper. The findings indicate that global phosphate demand is price inelastic both in the short and long run. In addition, in both the short and long run, income elasticity, cross price elasticity, and cross yield elasticity are inelastic. Our modeling predicts that phosphate consumption for fertilisers will increase from 45.35 million tons in 2018 to around 59.16 million tons by 2028; which implies that an average annual growth rate of 2.7% of P 2 O 5 will be required every year by phosphate consumers and that additional production capacity may be needed in order to meet this future demand. The results suggest that phosphate prices are forecast to increase, as long as demand continues to rise and no new production facilities are built.

Keywords: Demand elasticity; Price elasticity; Income elasticity; Cross elasticity; Phosphate fertilisers; Price forecasting; Precision farming (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s13563-021-00294-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:minecn:v:36:y:2023:i:2:d:10.1007_s13563-021-00294-z

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13563

DOI: 10.1007/s13563-021-00294-z

Access Statistics for this article

Mineral Economics is currently edited by Magnus Ericsson and Patrik Söderholm

More articles in Mineral Economics from Springer, Raw Materials Group (RMG), Luleå University of Technology
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().