One thought Iāve just had about this: these ācumulative elasticitiesā assume demand/āprice shifts just for one product at a time, and will therefore be too (EDIT) low if used for the effects of people going veg or reducing their consumption of multiple animal products. Hereās why:
Suppose one person (or a large group of them) just cuts out chicken, and for simplicity, they donāt eat more of anything else to compensate. That reduces the price of chicken. Other people will eat more chicken and less of everything else (including other animal products) to compensate, all else (or at least elasticities) equal. All else equal, it will also disproportionately affect chicken production.
Now, suppose this same person (or same large group of people) go vegan. This reduces the price of all animal products. Instead of others consuming more chicken and less of everything else in response, they consume more animal products all around (all else equal) and less plant-based food. The effect of other consumers on chicken in particular will be smaller than in 1, because they arenāt shifting away from other animal products to eat more chicken in particular. So more of the demand shift goes through.
It can also matter whether the elasticities were determined in a model with multiple products (general equilibrium), including with cross-price elasticities of demand, or just a single-product market. In models with multiple products, when you estimate the price elasticity of chicken demand, youāre adjusting for other prices and quantities besides chickenās. In a model with just chicken prices and quantities, you arenāt adjusting for other productsā prices and quantities. These elasticities will differ.
(Edited: had the comparison of sizes flipped.)
One thought Iāve just had about this: these ācumulative elasticitiesā assume demand/āprice shifts just for one product at a time, and will therefore be too (EDIT) low if used for the effects of people going veg or reducing their consumption of multiple animal products. Hereās why:
Suppose one person (or a large group of them) just cuts out chicken, and for simplicity, they donāt eat more of anything else to compensate. That reduces the price of chicken. Other people will eat more chicken and less of everything else (including other animal products) to compensate, all else (or at least elasticities) equal. All else equal, it will also disproportionately affect chicken production.
Now, suppose this same person (or same large group of people) go vegan. This reduces the price of all animal products. Instead of others consuming more chicken and less of everything else in response, they consume more animal products all around (all else equal) and less plant-based food. The effect of other consumers on chicken in particular will be smaller than in 1, because they arenāt shifting away from other animal products to eat more chicken in particular. So more of the demand shift goes through.
It can also matter whether the elasticities were determined in a model with multiple products (general equilibrium), including with cross-price elasticities of demand, or just a single-product market. In models with multiple products, when you estimate the price elasticity of chicken demand, youāre adjusting for other prices and quantities besides chickenās. In a model with just chicken prices and quantities, you arenāt adjusting for other productsā prices and quantities. These elasticities will differ.