Editing Cross elasticity of demand (section)

== History ==
[[File:Alfred Marshall - Principles of Economics (1890), Prometheus Books.JPG|thumb|Alfred Marshall's book, where the concept 'price elasticity of demand' originated from]]
The concept of "price elasticity of demand" originated by [[Alfred Marshall]] predicted relative changes between price and quantity. In the [[Cellophane paradox|Cellophane case]], Professor Stocking believed that a change in the price of one product will induce a price change of its ''rivalry'' in the same direction, so he firstly regarded that movement of two prices in the same direction explicitly reflects a high cross-price elasticity.<ref>{{Cite journal|last=Lishan|first=John M.|date=1959|title=The Cellophane Case and the Cross-Elasticity of Demand|url=https://heinonline.org/HOL/Page?handle=hein.journals/antibull4&id=593&div=&collection=|journal=Antitrust Bulletin|volume=4|pages=593}}</ref> However, during 1924–1940, du Pont cellophane prices moved independently from its perceived competitors' (waxed paper, vegetable parchment, etc) price; independent price movements reflect noncompetitive pricing between cellophane and its rival products.<ref>{{cite journal |last1=Waldman |first1=Don |title=The du Pont Cellophane Case Revisited: An Analysis of the Indirect Effects of Antitrust Policy on Market Structure and Performance |volume=25 |issue=4 |page=805 |journal=Antitrust Bulletin |date=1980 |doi=10.1177/0003603X8002500406 |s2cid=240425105 |access-date=25 April 2021 |url=https://heinonline.org/HOL/P?h=hein.journals/antibull25&i=839|url-access=subscription }}</ref> Thus, Professor Stocking's emphasis on the same movement of prices was too rigid, as the price of cellophane changed induced by three factors:
#Change in demand due to price change of rival products
#The production function of the cellophane
#The slope and position of the cost curves of rival products.
In other words, the competitive relationship between two goods (cross-price elasticity) can not be simply concluded by price change, as price change arises from both [[cost]] and [[demand]] factors. Furthermore, instead of a high positive or low positive elasticity concluded by observing respective price change, cross-elasticity of demand should be either '''positive or negative''' to represent if there is a '''complementary or substitutive relationship''' between two goods.