New Study Reveals Best Measure for Elasticity of Substitution Calculations
The article explains the differences between three measures of elasticity of substitution: Allen, Morishima, and McFadden. It uses real industry data to compare these measures and finds that Morishima Elasticity of Substitution is the most comprehensive measure. Allen elasticity scales up or down cross price elasticity, while Morishima measures changes in input demands for cost minimization. The choice of measure depends on the study's objective.