The Amoroso–Robinson relation, named after economists
Luigi Amoroso
Luigi Amoroso (26 March 1886 – 28 October 1965) was an Italian neoclassical economist influenced by Vilfredo Pareto. He provided support for and influenced the economic policy during the fascist regime.
Work
The microeconomical concept of the ...
and
Joan Robinson
Joan Violet Robinson (''née'' Maurice; 31 October 1903 – 5 August 1983) was a British economist well known for her wide-ranging contributions to economic theory. She was a central figure in what became known as post-Keynesian economics.
B ...
, describes the relation between price,
marginal revenue
Marginal revenue (or marginal benefit) is a central concept in microeconomics that describes the additional total revenue generated by increasing product sales by 1 unit.Bradley R. chiller, "Essentials of Economics", New York: McGraw-Hill, Inc., ...
, and
elasticity of demand
A good's price elasticity of demand (E_d, PED) is a measure of how sensitive the quantity demanded is to its price. When the price rises, quantity demanded falls for almost any good, but it falls more for some than for others. The price elastici ...
.
,
where
*
is the
marginal revenue
Marginal revenue (or marginal benefit) is a central concept in microeconomics that describes the additional total revenue generated by increasing product sales by 1 unit.Bradley R. chiller, "Essentials of Economics", New York: McGraw-Hill, Inc., ...
,
*
is the particular
good
In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil and is of interest in the study of ethics, morality, ph ...
,
*
is the good's
price
A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...
,
*
is the
price elasticity of demand.
Extension and generalization
In 1967,
Ernst Lykke Jensen published two extensions, one deterministic, the other probabilistic, of Amoroso–Robinson's formula.
See also
*
Lerner index
The Lerner index, formalized in 1934 by British economist of Russian origin Abba Lerner, is a measure of a firm's market power.
Definition
The Lerner index is defined by:
L=\frac
where P is the market price set by the firm and MC is the firm's ...
*
Ramsey problem The Ramsey problem, or Ramsey pricing, or Ramsey–Boiteux pricing, is a second-best policy problem concerning what prices a public monopoly should charge for the various products it sells in order to maximize social welfare (the sum of producer an ...
References
Citations
Bibliography
*
*
Further reading
*
Revenue
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