A Monopolist Can Never Price in the Inelastic Range of a Demand Curve or Can It?1-Reference-Cited by-同舟云学术

A Monopolist Can Never Price in the Inelastic Range of a Demand Curve or Can It?1

Published:2011-11 Issue:2 Volume:56 Page:108-117
ISSN:0569-4345
Container-title:The American Economist
language:en
Short-container-title:The American Economist

Author:

Yang C. W.¹,Hawley C. B.²,Huang B. N.³,Hwang M. J.⁴

Affiliation:

1. Department of Economics, National Chung Cheng University, Chiayi, Taiwan and Department of Economics, Clarion University of Pennsylvania, Clarion, PA 16214

2. Department of Economics, College of Business and Economics, West Virginia University Huang

3. National Chung Cheng University, Institute of International Economics, Chiayi

4. Department of Economics, College of Business and Economics, West Virginia University, P.O. Box 6025, Morgantown, WV 26506

Abstract

In this paper, we expand the double price elasticity theory developed by Greenhut, Hwang, and Ohta (1974) by including a general cost condition for a profit-maximizing monopolist, cartel, or price leader. Our model generalizes the conventional second-order condition as it incorporates the non-converging price elasticity. Contrary to the textbook prediction, a structural changes or an income effect in tobacco, crude oil and other demand inelastic markets can render the price elasticity of demand to oscillate for a long time but never reach its theoretical limit even in a very long time.

Publisher

SAGE Publications

Subject

General Economics, Econometrics and Finance

Link

http://journals.sagepub.com/doi/pdf/10.1177/056943451105600213

Reference23 articles.

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2. The Econometrics of Rational Addiction

3. A Theory of Rational Addiction

4. On the Estimation of Short- and Long-Run Elasticities in U. S. Petroleum Consumption: Comment