Choke Price

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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 ?
A second point to note from the table is that, in general, these maximum choke prices are quite low.
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].
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.
This analysis highlights the fundamental question of the limits of taxing sin: It is not a question of choke price per se, but rather it is a question of how federal tax revenue will change as cigarette tax rates are increased, given that it is possible to price individuals out of the market.