We consider a broad class of intertemporal economic problems and characterize the short-run and long-run responses of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discount- ing, we show that dynamic substitution effects can generate price elasticities of opposite signs in the short run and in the long run.
Dragone D., Vanin P. (2022). Substitution Effects in Intertemporal Problems. AMERICAN ECONOMIC JOURNAL: MICROECONOMICS, 14(3), 791-809 [10.1257/mic.20200121].
Substitution Effects in Intertemporal Problems
Dragone D.;Vanin P.
2022
Abstract
We consider a broad class of intertemporal economic problems and characterize the short-run and long-run responses of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discount- ing, we show that dynamic substitution effects can generate price elasticities of opposite signs in the short run and in the long run.File in questo prodotto:
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