The results of the sensitivity analysis show that the arc elasticity
of the vacant distance is 0.034, whereas the arc elasticity
of the occupied distance is 0.028.
In particular, we compute arc elasticity
around the equilibrium market price for each hour.
As outlined by Vazquez (2008), discussion and debate on the accuracy and applicability of Allen's arc elasticity
has a long history, dating back to the 1930s and continuing into the 1980s, 1990s, and 2000s (e.g., Vazquez 1985; Daellenbach et al.
Price elasticity of demand was then estimated by dividing the estimated percent change in number of prescriptions, based on the cap effect estimated in (1), by the estimated percentage change in beneficiaries' out-of-pocket price for prescription drugs, basing the percentage at the midpoint of the pre- and postcap quantifies and prices (arc elasticity
One way of summarizing price responsiveness when price changes are large is the arc elasticity
. Arc elasticity
equals the percentage change in energy use relative to the average of the new and old values for both quantity (Q) and price (P), as depicted in the following equation:
An arc elasticity
method was then used to account for the endpoints of each income range.
Unfortunately, the concept of arc elasticity
does not allow for an unambiguous ranking of the two markets: For small price intervals around the kink in the demand curves the arc elasticity
ranks the elasticity of the first market lower, but for larger intervals and for intervals that do not contain that price, in particular, for intervals around either of the critical prices at which the firm may consider pricing, the ranking is in line with the results from the use of the more common point elasticity.
Since "arc elasticity
" represents a popular measurement of economists, it also would have been interesting to know how marketers can determine inflection points, and where limits of marketing influence are reached.
Solving Equation 12 for [[Gamma].sub.1] and recognizing that the arc elasticity
[e.sub.S] is [R.sub.i]/[R.sub.G] shows that if [[Gamma].sub.0] = 0 then [[Gamma].sub.1] is [e.sub.S].
In their recent article in this journal, "Restrictions of Allen's Arc Elasticity
of Demand; Time to Consider the Alternative?" Daellenbach, Khandker, Knowles, and Sherony|l991~ (hereafter "DKKS") join a long list of detractors of Allen's |1934~ arc elasticity
The critical arc elasticity
of demand between the initial price and the monopoly prices is given by 1(r + t/50).