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Some estimates of cross-price elasticity


The final part of this exciting trilogy is cross-price elasticity. (See here for estimates of own price and income elasticity.) Here we are looking for how demand for one product, say cars, is influenced by the price of another product, say petrol. The idea is to find a spread of examples from goods that are close substitutes (have cross price elasticity near 1) to strong complements (have an elasticity near -1).

Within the literature there are a lot more examples of substitutes, like cars and public transport, than of complements, like cars and petrol. Indeed, it was a bit of a struggle to find any complements. Here are the examples I converged on:



The book versus culture number is taken from the study by Ringstad and Loyland. The numbers for organic food are taken from the report by Bunte and co-authors on Dutch data. Those for alcohol are from a UK a study by Meng and co-authors.



For numbers of public transport in the UK there is a study by Paulley and co-authors.


The cocaine number is taken from the study by Petry. That brings us on to food. I was expecting to easily find numbers for food, and get some examples of complements. But my impression is that things have not really moved on much since the work of Angus Deaton in the 1980s. So, why not stick with those numbers, these taken from a study using Indonesian data.




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