It might not be a genuine supply shift, if the same business/company would just want to set up elsewhere. You could model the probability that they wouldn’t, so there would be a supply shift, and then use elasticities for that.
Thanks, Michael. I meant “[expected] leftwards shift in the supply curve” = “probability of a farm being built by the target company elsewhere (p)”*”leftwards shift if a farm is built by the target company elsewhere (R1)” + (1 - p)*”leftwards shift if no farm is built by the target company elsewhere (R2)”. You are saying that R1 is 0, but I do not think this has to be the case. The farm would tend to start operations later if it had to be built elsewhere, and therefore there would be a temporary shift in the supply curve.
It might not be a genuine supply shift, if the same business/company would just want to set up elsewhere. You could model the probability that they wouldn’t, so there would be a supply shift, and then use elasticities for that.
Thanks, Michael. I meant “[expected] leftwards shift in the supply curve” = “probability of a farm being built by the target company elsewhere (p)”*”leftwards shift if a farm is built by the target company elsewhere (R1)” + (1 - p)*”leftwards shift if no farm is built by the target company elsewhere (R2)”. You are saying that R1 is 0, but I do not think this has to be the case. The farm would tend to start operations later if it had to be built elsewhere, and therefore there would be a temporary shift in the supply curve.
Yes, good point. It’s worth checking if the delay could have a significant impact.