Estimating short-run (SR) and long-run (LR) demand elasticities of phosphate

Abstract

Many empirical exercises estimating demand functions are concerned with estimating dynamic effects of price and income changes over time. Researchers are typically interested in getting estimates of both short-run (SR) and long-run (LR) elasticities, along with their standard errors. This study aimed to contribute with estimations of demand elasticities of world phosphate fertilisers. It answered the research question “How world demand of phosphate fertilisers is affected by its own price changes, cross price changes, income changes and other variables?”. Short and long run elasticities are calculated using an economic model in this paper. The findings indicate that global phosphate demand is price inelastic both in the short and long run. In addition, in both the short and long run, income elasticity, cross price elasticity, and cross yield elasticity are inelastic. Our modeling predicts that phosphate consumption for fertilisers will increase from 45.35 million tons in 2018 to around 59.16 million tons by 2028; which implies that an average annual growth rate of 2.7% of P 2 O 5 will be required every year by phosphate consumers and that additional production capacity may be needed in order to meet this future demand. The results suggest that phosphate prices are forecast to increase, as long as demand continues to rise and no new production facilities are built.

Validating LA/AIDS model in the food market of Pakistan

“…After reviewing the above literature, we found that many researchers reached the conclusion that changes in income and price of a product and its substitutes have a significant influence on product demand. The possible justification behind this notion is that when a change occurs in the price of a product, consumers tend to reduce the quantity demanded (QD) as per the law of demand (Al Rawashdeh, 2022). Another justification is that the increase in prices reduces the purchasing power of the consumers (Zhang et al, 2020).…”

Price and Income Elasticities of Hungarian Household Energy Demand: Implications for Energy Policy in the Context of the Energy Crisis

“…Numerous statistical techniques have been developed for modeling elasticities, including time series and regression models such as multiple regression [36,37], Autoregressive Integrated Moving Average (ARIMA) models [38,39], Vector Autoregressive (VAR)/Vector Error-Correction (VEC) models [40][41][42], and Autoregressive Distributed Lag (ADL)/Error-Correction Model (ECM) models [43,44]. However, insufficient observations make it challenging to estimate long-term elasticities and obtain accurate and reliable results using time series models.…”

An Evaluation of Phosphogypsum (PG) -Derived Nanohydroxyapatite (HAP) Synthesis Methods and Waste Management as a Phosphorus Source in the Agricultural Industry

“…Current projections show that the annual phosphate fertilizer consumption would rise approximately by 59. 16 Mtons by 2028, accounting for an annual 2.7% growth for the next decade [21]. This permanently increasing demand for phosphate fertilizers result a continuous production rate of phosphoric acid.…”