Menu** | **<<<<** | **>>>>** | Symmetry in
Elasticity Matrices**

Symmetry is the relationship between cross prices in a price elasticity
matrix as shown above (matrix for BL, NUT, W). The equations in gray are calculated by
formula as shown in cell C16 where the formula calculates the elasticity in
cell C16 as the elasticity in cell D15 times the base value (price times
quantity) of NUT divided by the base value of W (cells containing formulas
calculated by VORSIM are gray). The
point of this relationship is to have a reasonable, and in this case, a
positive sum of the qp (supply) cross price elasticities (sum of current qp
elast.). If any sum for a product is
not positive, you have a downward sloping supply schedule and the model is
likely to be unstable or give odd results for the product. Applying symmetry calculations to the lower
half of the matrix and then adjusting the cross price elasticities in the top
half of the matrix can assure you of a positive sum for supply. You have to determine which products have
cross price elasticities of a certain magnitude in the top half of the matrix
and enter them. Then clicking the |