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Elasticity identities:examples and counterexamples

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  • Ferran Sancho

Abstract

In this note, we examine the general validity of long-established identities relating to price elasticities of demand and elasticities of substitution, which have traditionally been assumed to hold. The central finding is that under non-homothetic preferences, these fundamental identities cease to hold, thereby rendering any derived calculations based on them unreliable. Additionally, for scenarios where these identities remain valid, we present their extension to the n-good case.

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  • Ferran Sancho, 2025. "Elasticity identities:examples and counterexamples," UFAE and IAE Working Papers 977.25, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    • Handle: RePEc:aub:autbar:977.25
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    1. Lecca, Patrizio & McGregor, Peter G. & Swales, J. Kim & Turner, Karen, 2014. "The added value from a general equilibrium analysis of increased efficiency in household energy use," Ecological Economics, Elsevier, vol. 100(C), pages 51-62.
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