A Note on Allen’s Arc Elasticity with Arithmetic, Geometric and Harmonic Means
Discussion and debate on the application of Allen’s arc elasticity has continued into the 21st century. This note demonstrates three points. First, perceived differences between Allen’s geometric mean elasticity and a constant demand elasticity based on an assumed isoelastic demand curve are negligible for small changes in price and quantity, which comprise the vast majority of such changes. Second, in some cases of rapid security or commodity price movements, the harmonic mean may provide the most accurate elasticity estimates across measures of central tendency. Third, because the arithmetic and harmonic means serve as bounds for the geometric mean, an elasticity based on the geometric mean may be considered a prudent choice among these three on this basis alone. Copyright International Atlantic Economic Society 2012
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 40 (2012)
Issue (Month): 2 (June)
|Contact details of provider:|| Postal: Suite 650, International Tower, 229 Peachtree Street, N.E., Atlanta, GA 30303|
Phone: (404) 965-1555
Fax: (404) 965-1556
Web page: http://springerlink.metapress.com/link.asp?id=112055
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shane Miller & Eckhard Platen, 2010.
"Real-World Pricing for a Modified Constant Elasticity of Variance Model,"
Applied Mathematical Finance,
Taylor & Francis Journals, vol. 17(2), pages 147-175.
- Shane M Miller & Eckhard Platen, 2008. "Real World Pricing for a Modified Constant Elasticity of Variance Model," Research Paper Series 237, Quantitative Finance Research Centre, University of Technology, Sydney.
- Sofia Berto Villas-Boas, 2009.
"An empirical investigation of the welfare effects of banning wholesale price discrimination,"
RAND Journal of Economics,
RAND Corporation, vol. 40(1), pages 20-46.
- Villas-Boas, Sofia B, 2008. "An Empirical Investigation of the Welfare Effects of Banning Wholesale Price Discrimination," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7vg17026, Department of Agricultural & Resource Economics, UC Berkeley.
- Villas-Boas, Sofia B, 2009. "An Empirical Investigation of the Welfare Effects of Banning Wholesale Price Discrimination," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt3fq869bb, Department of Agricultural & Resource Economics, UC Berkeley.
- Villas-Boas, Sofia B, 2006. "An empirical investigation of the welfare effects of banning wholesale price discrimination," CUDARE Working Paper Series 1017R3, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy, revised Oct 2008.
- Panagariya, Arvind & Shah, Shekhar & Mishra, Deepak, 2001.
"Demand elasticities in international trade: are they really low?,"
Journal of Development Economics,
Elsevier, vol. 64(2), pages 313-342, April.
- Shah, Shekhar & Mishra, Deepak & Panagariya, Arvind, 1996. "Demand elasticities in international trade : are they really low?," Policy Research Working Paper Series 1712, The World Bank.
- J. Gallego-Diaz, 1944. "A Note on the Arc Elasticity of Demand," Review of Economic Studies, Oxford University Press, vol. 12(2), pages 114-115.
- Greenblatt, Jeffery B. & Succar, Samir & Denkenberger, David C. & Williams, Robert H. & Socolow, Robert H., 2007. "Baseload wind energy: modeling the competition between gas turbines and compressed air energy storage for supplemental generation," Energy Policy, Elsevier, vol. 35(3), pages 1474-1492, March.
- C. C. Holt & P. A. Samuelson, 1946. "The Graphic Depiction of Elasticity of Demand," Journal of Political Economy, University of Chicago Press, vol. 54, pages 354.
- Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
- Natalya Ketenci & Idil Uz, 2011. "Bilateral and regional trade elasticities of the EU," Empirical Economics, Springer, vol. 40(3), pages 839-854, May.
When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:40:y:2012:i:2:p:161-171. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.