16 Feb 2012

Elasticity in action

GS says: "The following graph shows some preliminary data for the impact of our most recent rate increase on consumption – looks from an initial perspective that the rate increase needs to be > 20% to effect some behavioural change [an elastic response]... What is interesting is [how] a rate decrease resulted in increased consumption..."


What you are seeing is a "carefree zone" where customers who saw small changes in prices did not change their consumption by much (statistically the same as zero) and increases/decreases in consumption outside the zone associated with stronger decreases/increases (respectively) in prices.

2 comments:

  1. Who is GS? Goldman Sachs? Can you link the article from which you took this graph?

    ReplyDelete
  2. @Fletch -- proprietary data for now :(

    ReplyDelete

Read this first!

Make sure you copy your comment before submitting because sometimes the system will malfunction and you will lose your comment.

Spam will be deleted.

Comments on older posts must be approved (do not submit twice).

If you're having problems posting, email your comment to me