The Effect of Length of Run on Measured Demand Elasticities

E. C. Pasour and R. A. Schrimper

American Journal of Agricultural Economics, 1965, vol. 47, issue 3, 774-788

Abstract: This article is concerned with differences that can occur in measured demand elasticities because of varying lengths of adjustment period. Although it is generally accepted that length of run affects the elasticity of demand for use, its effect on the demand for stocks is not as widely recognized. The following analysis considers the effect of length of run on both of these components of the total demand for a commodity and then brings these results together to evaluate their joint effect on measured demand elasticities. Demand for use is shown to be more elastic in the long run when the relationship between commodities is either one of substitutability or complementarity. Also, conditions are presented under which the demand for a commodity for storage is more elastic in the short run. Finally, the condition necessary for the total elasticity of demand to have a "U" shape with respect to length of adjustment period is specified.

Date: 1965
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