Price Elasticities of Demand Are Minus One-half

Kenneth Clements

No 06-14, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: As an empirical regularity for broad commodity groups, we show that price elasticities of demand are scattered around the value of minus one-half. We also show that this finding is not inconsistent with the utility-maximising theory of the consumer under the conditions of preference independence. When nothing is known about the price-sensitivity of a good, a reasonable first approximation to its price elasticity is thus minus one-half.

Pages: 14 pages
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-mic and nep-upt
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Price elasticities of demand are minus one-half (2008)
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