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Cross-Price Elasticity (XED)


XED is a measure of sensitivity or quantity demanded for a good or service to a change in the price of some other good or service. This shows the interrelationship between 2 goods. If the result of the equation is a positive number; then we would expect the products to be substitutes. Conversely if the result is a negative number then we would expect the products to be complimentary. This can be used by a company to work out its close competitors.









Page last updated on 20/10/13
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