A Look at Flexibilities and Elasticities

Economists have developed a carefully reasoned network of theoretical restrictions applying to price and income elasticities of demand. Yet, because supplies of many farm‐produced commodities are fixed in the short run, agricultural economists often find that price flexibilities are more useful and easier to measure empirically, especially in marketwide situations. Theoretical restrictions on demand elasticities imply a complete, largely unexplored set of corresponding restrictions among price flexibilities. These flexibility conditions apply to column sums, row sums, and cross‐coefficient symmetry within a multicommodity flexibility matrix. As with elasticities, the theoretical relationships among price flexibilities have implications for applied research.