Dragone, Davide ; Vanin, Paolo
(2020)
Substitution Effects in Intertemporal Problems.
Bologna:
Dipartimento di Scienze economiche,
p. 24.
DOI 10.6092/unibo/amsacta/6376.
In: Quaderni - Working Paper DSE
(1147).
ISSN 2282-6483.
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Abstract
We consider a broad class of intertemporal economic problems and we characterize the short and long-run response of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discounting, we show that dynamic substitution effects can generate price elasticities of opposite sign in the short and in the long run.
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