Economics, Econometrics and Finance
4 years ago

Dynamic price changes can lead to opposite consumer reactions over time.

SSRN Electronic Journal
Substitution Effects in Intertemporal Problems
Davide Dragone, Paolo Vanin

Paper Summary

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The article explores how the demand for a product changes over time when its price goes up. Depending on how much people value the future versus the present, the demand can either increase or decrease in the short and long term. This means that price changes can have different effects on how much of a product people want right away versus in the future.