%33 œ #зР8 1 - %3Q
%34 œ #4p48 ’1 -%3Q
(9)
(10)
In comparing these to the own- and cross-price elasticities of the standard semilog model
(Table 1), both have an extra term involving own income elasticity (1 - %3Q) which
allows more flexibility in the values the elasticities can take.
As with the semilog system, in the DS system the own- and cross- price
elasticities have the relative relationship within a given Marshalian demand,
%34/%35 œ #4p48/#5p58,
though it has greater flexibility in the elasticity of a given price in own demand relative to
other demands,
%34/%54 œ’1-%3Q“/’1-%5Q
which depends on the income elasticities of both goods. In the semilog system, by
contrast, %34/%54 œ 1.
While (6)-(8) indicate that the DS system has a greater flexibility in
representation of Marshallian elasticities, it still embodies some restrictions, due to its
relatively simple functional forms for estimation and relatively small number of
parameters to be estimated. From (9) and (10), it can be seen that the own- and cross-
price elasticities of demand for good i are related to the income elasticity; this
relationship is
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