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The LeChatelier Principle

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  • Milgrom, Paul
  • Roberts, John

Abstract

The LeChatelier principle, in the form introduced into economics by Paul A. Samuelson, asserts that, at a point of long-run equilibrium, the derivative of long-run compensated demand with respect to own price is larger in magnitude than the derivative of short-run compensated demand. The authors introduce an extended LeChatelier principle that applies also to large price changes and to uncompensated demand as well as to a wide range of concave and nonconcave maximization problems outside the scope of demand theory. This extension also clarifies the intuitive basis of the principle. Copyright 1996 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 86 (1996)
Issue (Month): 1 (March)
Pages: 173-79

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Handle: RePEc:aea:aecrev:v:86:y:1996:i:1:p:173-79

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  1. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
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Cited by:
  1. Zafirovski, Milan, 2002. "Reconsidering equilibrium: a socio-economic perspective," The Journal of Socio-Economics, Elsevier, vol. 31(5), pages 559-579.
  2. Lapan, Harvey E. & Hennessy, David A., 2007. "Unit Vs. Ad Valorem Taxes in Multi-Product Cournot Oligopoly," Staff General Research Papers 12780, Iowa State University, Department of Economics.
  3. Hennessy, David A. & Saak, Alexander, 2002. "State-Contingent Demand for Herbicide-Tolerance Seed Trait," Staff General Research Papers 10123, Iowa State University, Department of Economics.
  4. Hennessy, David A., 1997. "The short- and long-run comparative statics of uncertainty," Economics Letters, Elsevier, vol. 55(3), pages 347-353, September.
  5. Nti, Kofi O. & Dompere, Kofi K., 1997. "Technological progress and optimal factor demand," International Journal of Production Economics, Elsevier, vol. 49(2), pages 117-130, April.
  6. Briec, Walter & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2010. "Tangency capacity notions based upon the profit and cost functions: A non-parametric approach and a general comparison," Economic Modelling, Elsevier, vol. 27(5), pages 1156-1166, September.
  7. David A. Hennessy, 2005. "Slaughterhouse Rules: Animal Uniformity and Regulating for Food Safety in Meat Packing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 600-609.
  8. Julian Jamison, 2006. "The Le Chatelier Principle in lattices," Economics Bulletin, AccessEcon, vol. 3(2), pages 1-9.
  9. Daron Acemoglu, 2005. "Equilibrium Bias of Technology," NBER Working Papers 11845, National Bureau of Economic Research, Inc.
  10. Roberts, Kevin, 1999. "Rationality and the LeChatelier Principle," Journal of Economic Theory, Elsevier, vol. 87(2), pages 416-428, August.
  11. George Lady & James Quirk, 2010. "The global LeChatelier Principle and multimarket equilibria," Review of Economic Design, Springer, vol. 14(1), pages 193-201, March.
  12. Natsuko Iwasaki & Victor Tremblay, 2009. "The effect of marketing regulations on efficiency: LeChatelier versus coordination effects," Journal of Productivity Analysis, Springer, vol. 32(1), pages 41-54, August.
  13. Elena Antoniadou, 2007. "Comparative Statics for the Consumer Problem," Economic Theory, Springer, vol. 31(1), pages 189-203, April.

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