The Effects of Supply Shifts on Producers' Surplus: the Case of Inelastic Linear Supply Curves
AbstractThis paper derives sufficient conditions (in terms of supply and demand elasticities) for producers to gain under different supply shifts when supply and demand are specified to be linear functions and supply is inelastic. It is shown that regardless of the type of supply shift, producers lose whenever the sum of absolute values of supply and demand elasticities is less than one, while they gain when production takes place in the elastic portion of the demand. In all other cases arising from alternative elasticity configurations simple formulas developed in this paper may be used to determine the direction of change in producers surplus.
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Bibliographic InfoArticle provided by Greek Association of Agricultural Economists in its journal Agricultural Economics Review.
Volume (Year): 03 (2002)
Issue (Month): 1 (January)
Demand and Price Analysis;
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- Geoff W. Edwards & Jan P. Voon, 1997. "The Calculation of Research Benefits with Linear and Nonlinear Specifications of Demand and Supply: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1368-1371.
- Martin, Will & Alston, Julian M, 1997. "Producer Surplus without Apology? Evaluating Investments in R&D," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 146-58, June.
- Elamin H. Elbasha, 1997. "The Calculation of Research Benefits with Linear and Nonlinear Specifications of Demand and Supply: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1363-1367.
- Couvet, Denis & Desquilbet, Marion & Dorin, Bruno, 2013. "Land sharing vs. land sparing for biodiversity: How agricultural markets make the difference," TSE Working Papers 13-435, Toulouse School of Economics (TSE).
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