Choke Price

(redirected from Choke Prices)

Choke Price

The price at which demand for an asset drops to zero. That is, when a company charges the choke price or higher for a good or service, all potential customers believe that the price is too high and, as a result, do not buy. Most often, the choke price is associated with natural resources. For example, economists may discuss the price per barrel of oil at which consumers simply no longer buy oil. Colloquially, a choke may refer to a price at which demand drops, but it is important to note that the choke price refers to no demand at all.
References in periodicals archive ?
The middle column of numbers are our point estimates of the various choke prices.
Nevertheless, it is clear that choke prices vary by state and that many of the states having high choke prices low state-tax states.
A second point to note from the table is that, in general, these maximum choke prices are quite low.
Thus, a truly accurate forecast of choke prices and tax revenues would require an analysis of the same genre as the half-life of atomic particles: We derive a demand forecast based on certain sample averages, but then price (tax) changes which changes the number of consumers and hence produces new sample averages with concomitant new forecasts; further tax increases continue the process with the "representative individual" changing so as to exhibit more inelastic demand and higher choke prices at each iteration.
If states react to declining revenues by increasing state cigarette tax rates, it will only hasten the onset of choke prices and falling total tax revenues (both state and federal).
First we provide interval estimates of the choke price of cigarettes by state.
Using our estimates of the parameters of this model presented in the first column of Table I we can obtain estimates of the long run choke price [Mathematical Expression Omitted].