Kysynnän hintajoustavuuden määrittäminen ja kysynnän kausivaihtelu

Authors

• Paavo Kaarlehto Maatalouden taloudellinen tutkimuslaitos, Helsinki

DOI: https://doi.org/10.23986/afsci.71357

Abstract

Quite frequently the empirical demand analysis has to be based on time-series data on prices and quantities sold. However, the seasonal fluctuation of demand may cause some systematic errors in the demand function derived from this type of data. In the first place there is the question of whether it is correct to regard the butter demand as causally dependent on the butter price, or is it necessary to propose some bilateral interdependence between prices ans quantities sold. In the literature on demand analysis unilateral dependence has generally been regarded as axiomatic. This approach is based mainly on the fact that the consumer is confronted with fixed prices at the store, bargaining being practically absent (7). Knowing from previous experience the effects of seasonal fluctuation of demand sellers at a given market might tend to counteract this fluctuation by changing prices. Under price control this might affect the decisions of the responsible authorities, also. Thus the question of dependence requires careful consideration in each case studied. The changing demand conditions might cause errors in a more technical sense, also. E.g. if the effect of a change in price is studied during a period of decreasing demand, market statistics might be misleading in the way illustrated in figure 3. The curve Q refers to the quantities sold as given by market statistics. During the two first weeks an average quantity of ON has been sold. After a certain decrease in price, in the beginning of third week an increase in sales takes place so that during the third and fourth week averagely OM has been sold. The effect of the price change now seems to be NM. This, of course, is incorrect, since the basis for the comparison should be the quantity OK to which the sales would have decreased without the change in price. Consequently, the real effect of the price change is KM. The numerical value for the observation 3in the diagram cannot be obtained from ordinary market statistics, however. Under normal conditions it is difficult to study the problems outlined above. During the last few years the conditions on the butter market in Finland offer some interesting data from this point of view. Butter has been under price control for many years, whereas the demand for each prevailing price has been well satisfied. After a period of violent changes during 1950 and 1951 the price of butter has been stable during the latter part of 1952 and all through 1953. The sales of butter during the stable price period now offer valuable assistance for the calculation of the price elasticity for the years 1950—51. The fluctuation indices (deviations from 12-month average) of butter prices and quantities sold are presented in figures 4 and 5. The Q53 curve represents the sales-index of the same type under a stable price. It is readily seen that if this seasonal fluctuation, which is represented by the 1953 sales-index, were disregarded, the regression calculation would be less significant. In figure 6 the seasonal fluctuation has been eliminated by dividing the indices of quantities sold for each month by the corresponding indices for 1953. The elasticity coefficients calculated from the corrected as well as from the original data are presented in table 1. The tests of significance argue very clearly in favour of the method of correction used.