Amoroso–Robinson relation

The Amoroso–Robinson relation, named after economists Luigi Amoroso and Joan Robinson,^[1] describes the relation between price, marginal revenue, and price elasticity of demand.

${\displaystyle {\frac {\partial R}{\partial x}}=p\left(1+{\frac {1}{\epsilon _{x,p}}}\right)}$,

where

• ${\displaystyle \scriptstyle {\frac {\partial R}{\partial x}}}$ is the marginal revenue,
• ${\displaystyle x}$ is the particular good,
• ${\displaystyle p}$ is the good's price,
• ${\displaystyle \epsilon _{x,p}<0}$ 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.^[2]

See also

• Lerner index
• Ramsey problem

References

Citations

Bibliography

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