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The LeChatelier principle: the long and the short of it

Author

Listed:
  • Wing Suen

    (School of Economics and Finance, The University of Hong Kong, Pokfulam Road,Hong Kong, HONG KONG)

  • Paul Tseng

    (Department of Mathematics, University of Washington, Seattle, WA 98195, USA)

  • Eugene Silberberg

    (Department of Economics, University of Washington, Seattle, WA 98195, USA)

Abstract

Using ordinary calculus techniques, we investigate the conditions under which LeChatelier effects are signable for finite changes in parameter values. We show, for example, that the short run demand for a factor is always less responsive to price changes than the long run demand, provided that the factor of production and the fixed factor do not switch from being substitutes to being complements (or vice versa) over the relevant range of the price change. The absence of a sign change in the complementarity/substitutability relation holds under conditions that are considerably more general than supermodularity of the production function.

Suggested Citation

  • Wing Suen & Paul Tseng & Eugene Silberberg, 2000. "The LeChatelier principle: the long and the short of it," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(2), pages 471-476.
    • Handle: RePEc:spr:joecth:v:16:y:2000:i:2:p:471-476
    Note: Received: June 10, 1999; revised version: June 24, 1999
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    Citations

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    Cited by:

    1. Alexandrov, Alexei & Bedre-Defolie, Özlem, 2017. "LeChatelier–Samuelson principle in games and pass-through of shocks," Journal of Economic Theory, Elsevier, vol. 168(C), pages 44-54.
    2. George Lady & James Quirk, 2010. "The global LeChatelier Principle and multimarket equilibria," Review of Economic Design, Springer;Society for Economic Design, vol. 14(1), pages 193-201, March.
    3. Peter Arendorf Bache & Anders Laugesen, 2013. "An Industry-Equilibrium Analysis of the LeChatelier Principle," Economics Working Papers 2013-16, Department of Economics and Business Economics, Aarhus University.
    4. Lady, George M. & Quirk, James P., 2007. "The scope of the LeChatelier Principle," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 381(C), pages 351-365.
    5. Julian Jamison, 2006. "The Le Chatelier Principle in lattices," Economics Bulletin, AccessEcon, vol. 3(2), pages 1-9.

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