Demand has also been hit by a massive increase in the price of cod in recent years, with the fish approaching the so-called
choke price, whereby demand plummets as prices become too high.
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].
Table II presents our choke price estimates computed according to this procedure.
The bounds on our interval estimates form a 95% asymptotic confidence interval on the true choke price for the representative consumer in each state.
Resource nonusers are assumed to currently (with degraded quality) face a price for on-site use which is greater than or equal to their choke price.
where [Mathematical Expression Omitted] is the choke price which depends on the quality level.
This will hold if the quality improvement is sufficient to increase the Marshallian demand so that the own-price is no longer greater than or equal to the choke price.
2] - [Beta] P(r), q([Beta]) = 0, where P(r) is the delivered price and [Beta] is a parameter equal to the choke price.
Thus the general pattern of spatial pricing is a function of P(0) and e, which vary independently of R except when the choke price is binding--i.
A single-plant spatial monopolist under transportation cost absorption regulation will charge the choke price at r = R if regulated e [Epsilon] [1/2, 1]; otherwise it will charge a price less than the choke price at r = R if regulated e [Epsilon] [0, 1/2).
This non-constancy of
choke price has non-linear effects on CS.
