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.

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.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/893414
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