Cross-Elasticity

related to: Elasticity

Definition

cross-price elasticity of demand Percentage change in the quantity demanded of one good resulting from a 1-percent increase in the price of another

$E_{q_1,p_2}=\frac{p_2}{q_1}\frac{\delta q_1}{\delta p_2}$ with

• $E_{q_1,p_2}>0$ for substitutes,
• and $E_{q_1,p_2}<0$ for complements.