Finance:Amoroso–Robinson relation

The Amoroso–Robinson relation, named after economists Luigi Amoroso and Joan Robinson, describes the relation between price, marginal revenue, and price elasticity of demand. [math]\displaystyle{ \frac{\partial R}{\partial x}=p\left( 1+\frac{1}{\epsilon _{x,p}}\right) }[/math],

where

• [math]\displaystyle{ \scriptstyle \frac{\partial R}{\partial x} }[/math] is the marginal revenue,
• [math]\displaystyle{ x }[/math] is the particular good,
• [math]\displaystyle{ p }[/math] is the good's price,
• [math]\displaystyle{ \epsilon_{x,p}\lt 0 }[/math] 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
• Ramsey problem

References

Bibliography

• Robinson, Joan (1932). "Imperfect Competition and Falling Supply Price". The Economic Journal 42 (168): 544–554. doi:10.2307/2223779. 
• Jensen, Ernst Lykke (1967-05-01). "Extensions of Amoroso-Robinson's Formula" (in en). Management Science 13 (9): 712–722. doi:10.1287/mnsc.13.9.712. http://pubsonline.informs.org/doi/abs/10.1287/mnsc.13.9.712. 

Further reading

• Nicholson, Walter (2005). Microeconomic Theory: Basic Principles and Extensions (Ninth ed.). Thomson/South-Western. pp. 385–414. ISBN 0-324-27086-0.