Estimation of elasticity of demand Scholars have estimated elasticity of demand for various products. Here are some examples. Price elasticity of demand
Some early work in estimation of price elasticity has been done by H.F. Houthakker and Lester B. Taylor in their book Consumer Demand in the United States: Analysis and Projection, 2nd edition (Harvard University Press, 1970) . The following table is a compilation of elasticities done by different scholars. This table appears in Principles of Economics by Arthur O'Sullivan and Steven M. Sheffrin.
Price elasticity of Demand for Selected Products
Product |
Price elasticity of Demand |
Salt |
.1 |
Water |
.2 |
Coffee |
.3 |
Cigarettes |
.3 |
Shoes and Footwear |
.7 |
Housing |
1.0 |
Automobile |
1.2 |
Foreign Travel |
1.8 |
Restaurant Meals |
2.3 |
Air Travel |
2.4 |
Motion Pictures |
3.7 |
Specific Brands of Coffee |
5.6 |
Source: Principles of Economics, Arthur O'Sullivan and Steven M. Sheffrin, 1st edition, Prentice Hall, (2002).
Here is another study on elasticity:
Estimates of Price elasticity of demand for Selected Modes of Transportation
| Category |
Estimated elasticity |
| Airline Travel, leisure |
1.52 |
| Rail travel, leisure |
1.4 |
| Airline Travel, business |
1.15 |
| Rail travel, business |
.7 |
| Urban Transit |
between .04 and .34 |
Source: Journal of Transport Economics and Policy (May 1992), Tae Hoon Oum, W.G. Waters II and Jong-Say Yong.
For the complete article please go to:
Concepts of Price elasticities of Transport Demand and Recent Empirical Estimates - An Interpretative Survey
Cross Price elasticity:
Studies have been done for cross price elasticities of products such as automoblies. It is not surprising that we find high cross price elasticity between cars that are substitutes such as between BMW 735i and Lexus LS400 or between Nissan Sentra and Ford Escort. Because of the price ranges of Sentra and Escort, these are good substitutes for people in certain income range. In other words people who buy Nissan Sentra will be looking at Ford Escort in case prices of Sentra go up. In genral these people will not be looking at BMW since Sentra and BMW are not really substitutes. Empirical results also show that there is almost zero cross price elasticity between BMW and Sentra.
Source: Automobile Prices in Market equilibrium, Econometrica 63 (July 1995), S Berry, J Levinson and A. Pakes.
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