Lecture 2 - /:/§FM MW/zbdg . , WLlWflzmAJMR‘bfl 40,117...

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Unformatted text preview: /:/§FM MW/zbdg . , WLlWflzmAJMR‘bfl 40,117 I Mg'howsmm‘wm: . ‘ . erg _ "was M ‘(Mr wwa ' . VaWM' mams ' - mMsm-m ‘ * WP Ya: (4km compact how AV malted“ MWaLso c'hpwapdai'em W I all? @Peswt, A (’o'uct, 'E> meager; '. — 640"‘%¥ . Mead M4515 ha com-Um}: ‘# v 7 ‘ Q .5 M3? ‘ - = AVx . ' 9x I " IX?!“ flamboFaW 6‘40" 'W We, ’ values I 4 mem' “£593. .” I )Aodam ' wig i___xiz . I. .6...- tr ‘ I I M Anglia“ 2:93 ' » éx"? <V Yr -‘ ‘Ev‘ frw’ "all! - (rm ‘ I ’ mahsfid‘ ‘u‘C' 3‘ ‘ ’e’e’f‘.‘ ' .1 _ .(ixtefl'O 5%" 3"“ ¥ my]; TABLE 2.1 Estimates of the Price Elasticity ofbeniand for Selected Food, Tobacco, and Liquor Products* ‘ . ‘ ' Product I ' . _ Estimated 6gp Cigars , ' —o.756 Canned and cored seafood 1 - - -—0.736‘ Fresh and frozen fish . a i "—0.695 ‘ Cheese _ ’ .' —o.s95 Ice cream . _ ' —O.349 ‘ v Beer and malt beverages - i ——0.283 Bread and bakery products! - —.0.220 . ~ - Wine'and brandy . 40.198 ‘ m ' . _ cookies and crackers ‘ 40.1.88 ' \l I Roasted coffee ' —-O.120 ' - ‘ Cigarettes —0.107 Chewing tobacco ' . —0.105. Pet food , V - —O.-061 Breakfast cereal _ —0.031 ' *Source: Emilio Pagouiatos and Robert Sorensen, "What Determines the Elasticity of industry Demand?» Internationai journal oflndustrial Organization, 4 (1986): 237-250. Mr??? TABLE 2.2 Estimates of the Price Elasticity ol’ Demand for Selected Modes of Transportation* > ~Category. . l ' _ -_ Estimated eqp Airline travel, leisure .‘ ' " ~1452 Rail travel, leisure ' ‘ . ‘ —1.4'O ' Airline travel, business - - —1.15 . Rail travel, business _ . ' ‘ «0.70 Urban transit . ‘ between 40.04 and —0,34 ~ ‘*Source: Elasticities from the cross-sectional studies summarized in Tables 2, 3, 4 Tae Hoon Qum, W. G.. . Waters II, and Jong~Say Yong, “Concepts of Price Elasticitiesof Transport Demand and Recent Empirical A Estimates,” journal of Trdnsport Economics and Policy (May .1992): 139-154. TABLE 2.3 ‘ Estimates of Price ElaSticities of. Demand for Selected Makes of Automobiles, 1990* W 4' u Model ' Price Estimated 6gp 1M5; “ Mazda 323 $ 5,039 -. v -—6.358 r , ' W5 . , Nissan Sentra ' ~ . $ 5,661 - - 46.528 ; V . Ford Escort . ’ -$ 5,663 +6031- ‘ ' l' CheVrolet Cavalier , $5,797. ‘. 446.433 ' ‘ Honda'Accord I ' $49,292“ —4.798, -_Foird Taurus, . « , $ 9,671. 4 - - ——-4.220 < - 1 Buick Century 5 10,138 ‘ - —-6.755 NissanMaxima $13,695 . —4.845 'Aculra Legend ‘ $18,944 4134 Lincoln Town Car 1 _ $1 31412 I . 4—4320 1 l I a. Cadillac Seville I $24,544 , 4 _ +3973 . . 'Lexus 1.5400 - . $27,544 - -—3.G85 \ BMW 7354 , $37,490 , —_3.515 . *sbwce: Table v in 5. Berry, J. Levimohn, and A, Paikes, ‘Aurtomobile Prices in Market Equilibrium," Econometrica, 63 (My 1995): 841—890. 04¢th? 4"- ‘M‘M am or 5W ” . Mm 's i TABLE 2.8 Long-Run and Short-=Run Price Elasticities of Dema'nd'for Crude Oil in Selected Countries . [32M ‘(aMiA ‘ . .Prke’Elasticity Country . "j Short-Run “ ‘ Long-Run Australiad -- - 4—0.034 _ —0.068 France _ , ‘ —-‘0.069 ' +0568 Germeny - _V . —o.024 ' —o.279. Japan - i-~ —'o.o71 —o.357 ‘ Korea - . - ' —o.094 40.178, . Netherlands -0.057 —0.244 Spain ‘ . _ '-0.087 . 40.146 'United Kingdom ’ - —0.068 -O.182‘ - United States —0.061 —O.453 o«a_‘°’1; * ' ' . ZXBW é§%")’%§”3¢ > W is +142; 9m M443 5/ I . / “ - ~ .9 . ;‘ . ‘ "ri"; , , . 'a c .1. 51.: I _ _ z w ' ' ‘ ) r oW'K: x; 37,151 - ~ I "'5"? .\ A, P . v 2:3 as . -‘ " Morn/1:; TABLE 2.4 Estimates of the. Incon‘le Elasticity of Demand for Selected food Products* ~ Product ‘ a . _ Estimatedecu / Crea'rn Peaches Apples. . . - "Fresh peas ‘ ' i ‘ a - . i y 1-.05 dioranges’ - _ . I 'l I ' 0.8.3. ' I Onions ' V0.58 Eggs . ' » , ' 0.44 Milk ' ‘ ' “ ' - 0.50 KButter I r 0.37 \C Potatoes , l . V v i 0.15 > Margarine ‘ . ‘ —0.2‘0 ; ' Flour ,- X _-O.36. ‘ I . *Sources: The first '10 entries in Table 2.4 come from Table 1-1 a ‘in Daniel B. Suits, “Agriculture,” Chapter] in The Structure of _ ' a- American Industry, 9th ed, Walter Adams and James Brock, eds. (Englewood Cliffs, NJ: Prentice Hall,.l995); the last two entries . come from H. S. Houthhakker and Lester D. Taylor, Consumer Demand in the United States, 1929—1970 (Cambridge, MA: _ Harvard University Press, 1966). ' ‘ * V owl—Wiz- TABLE 2.5 Cross-Price Elasticities of Demandrfor’Selected Meat Products* Price of Beef Price of Pork Price of Chicken; Demand for beef I —0.6S’;* . IO.01*** i l 0.20 Demand for pork _ . i 0.25 ' - 1—90.45 ' v . ' 0.16 _ Demand for chicken , ~ 0.12 ' . A 0.20 ' - ' —.0.65 *Sources: Table i—4'in Daniel B. Suits, “AgricUlture,” Chapteri The Structure "of American Industry, 8th ed., Walter Adams and James Brock, eds. (Englewood Cliffs, NJ: Prentvice-Hall,1990). **This'is the price elasticity of demand for beef. ~ ***This is the cross-price elasticity of demand for'beef with. respect to the price of pork. TABLE 2.6 cross-Price Elasticities of Demand for Selected Makes of Automobiles* Price of Sentra Price Vof Escort Price of L$400 V Price of 735i ’ Demand for Sentra —6.528** ~ 0.078*** 0.000 0.000 ' Demand for Escort ' 0.054 —6.031 ‘ 0.001 ' 0.000 Demand for LS400 , 0.000 0.001 ,1 —-3.085. 0.093 . Demand for 7351 0.000 r 0.001 _ | 0.032 ‘ w3.515 *So‘urces:Adapted from Table Vi in S. Berry, J. Levinsohn, and A. Fakes,- ‘Automobile Prices in Market ‘ . ‘ Equilibrium," Econometrica, 63 (July 1995): 841-890. ' _ “This is the price elasticity of demand for a Sentra. ‘ .: . . ***This is the cross-price elasticity of demand for a Sentra with respect to the price of an Escort. TABLE 2.7 Price, Cross-Price, and income Elasticities of Demand for Coca=Cola and Pepsi. _ Elasticity _ I I _ Coca-Cola Pepsi I l _‘ _ ' Price elasticity of demand ‘ —‘l.47 ' ‘ —l.55 ' ’ ‘ < Cross-price elasticity of demand ' 0.52 V 0.64» income elasticity of' demand 0.58 ' 1.38 ' V G‘W'yfl'l TABLE l2.3 Representative Price and Income Elasticities of Demand 1 Price Elasticity - Income Elasticity Food ' —0.2-1 7 ' . ‘I - +0.28 Medical services I V -0.18 ‘ _ ' I +0.22 Housing . _ A I Rental . . -0.18, . . . , 1 +1.00 ~ Owner occupied. ' ,—1.20 t 1 I" V - . +1.20 "Electricity ,1 ‘ _' —1v.14 ' 7' ' ' , '+0.61 Automobiles . l —1.20 . _ ' +3.00 Gasoline K . ' -0.55 K I. , ' +1.60 Beet '_ ' ' - ' —'0.26 " f , - ‘ +0.38 Wine _. - . _.—0:88 ‘ ' ' ,'+~0.97~ Marijuana , ~ ' _. . +1.50 . . 0.00 Cigarettes —0.35 +0.50 Abortions . I ~—0.81 ‘ 3 +0.79 Transatlantic airtravel ' 41.30 ' +1.40 Imports ‘ —0.58 ' +2.73 Money ' . ‘ -0.40 ~ ‘ + 1 .00 SOURCES: Food: H. Wold and L. Iureen, Demand Analysis (New York: John Wiley 8: Sons, 1953): 203. Medical services: elasticity frank. Andersen and L. Beniaam, “Factors Affecting the Relationship between Income and Medical Care Consumption,” in Herbert Klarman, Ed., Empirical Studies in Health Economics (Baltimore: Johns Hopkins University Press, 1970); price elasticity fiom W. C. et 31,, “Health Insurance and theDernand for MedicalCare: 4 Evidence fi'om a Randomized Experiment,” American Economic Review (June 1987): 25 1—7 7. Housing: income elasticities from F. de Leeuw, “The Demand for Housing,” Reviewa Economics and Statistic: (February 1971); price elasticities from . H. S. Hourhaldrer and L. D. Taylor, Consumer Demand infbe United (Cambridge, MA: Harvard University Press, 1970): 166 —67. Electricity: R. F. Halvorsen, “Residential Demand for Electricity,” unpublished Ph.D. dissertation, Harvard _ University, December 1972. Automobiles: Gregory C. Chow, Demand‘fiyr Antomolrile: in the United State: (Amsterdam: North 1957). Gasoline: C. Dalil, “Gasoline Survey,” Energyjo'nrnal7 (1986): 67—82. Beer and Wine:']. A. Johnson, E. H. Oksanen, M. R. Veal‘l, and D. Fritz, “Short-Run and Long~Rnn Elasticities for Canadian Consumption of , Alcoholic Beverages,” Review of Economic: and Statistics (February 1992):'64—,74. Marijuana: T. C. Misket and F. Valdl, “Some Estimate of Price and Expenditure Elasticities‘ among UCLA Students,” Review of Economic: and Statistics (November 1972): 474—75. Cigarettes: F. Chalet-maker, “Rational Addictive Behavior and Cigarette Smoking,” Journal of Political Economy (August 1991): 722—42. Abortions: M. H. Medofi‘, -“An Economic Analysis of the Demand for Abortions,” Economic Inquiry 1988): 253—59. Transatlantic air travel: I. M. Cigliano, “Price and Income Elasticities - for Airline Travel,”'Bnoinetr Economics (September 1980):'17-21. Imports: M. D. “Beware of Econometricians Bearing Estimates,” Journal of Policy Anaétri: and Management (Fall 1991): 546—67. Money: D. L. Hofiiman and R. H. Rasche, “Long-Run Income and Interest Elasdci'u'es of Money Demand in the United States,” Review of Economics and Statistics (Noveinber1199-1): 66.5 —74. ', ' I ‘ V ' " ' - NOTE: Price elasticity refers to interest rate elasticity. I octet-‘93:" (A) {MA (15) PM % (New C ' ~ ~ MLWEW SM 4* “W M51. 7 ...
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This note was uploaded on 03/19/2011 for the course ECON 50 taught by Professor Abramitzky,r during the Spring '07 term at Stanford.

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Lecture 2 - /:/§FM MW/zbdg . , WLlWflzmAJMR‘bfl 40,117...

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