Cross Price Elasticity Calculator - Demand Relationship

The cross price elasticity calculator measures how quantity demanded of one good responds when the price of another good changes. It uses the midpoint, or arc, formula: Exy = percent change in quantity of X divided by percent change in price of Y, with each percent change taken against the average of the start and end values. Positive Exy indicates substitutes: when coffee prices rise, tea quantity often rises. Negative Exy indicates complements: when printer prices rise, ink quantity often falls. A result near zero suggests little relationship in the sample. The midpoint form is used because a 10-to-12 price change is the same 18.18% move as 12-to-10 in absolute value, so the elasticity does not depend on which point is treated as the base. Quantity of 100 to 120 with a related price of 10 to 12 yields Exy = 1.00, a unit-elastic substitute relationship in that range. Quantity of 200 to 150 with a related price of 5 to 6 yields about −1.57, a complement. If the related price does not change, the denominator is zero and the cross price elasticity calculator returns an error. Pricing teams use Exy to guess whether a rival's promotion will steal volume or whether a bundle should be discounted together. Antitrust and classroom work use the sign to classify goods. The measure is local to the two observations you enter; it is not a demand curve for all prices. Income, seasonality, and advertising can move quantity even if the related price is the true story. Caveats: own-price elasticity uses the same good's price, not a related product's price. Arc elasticity differs from a point elasticity taken from a regression slope. Units cancel, so you may mix packs and dollars as long as each series is consistent. Recalculate with other date pairs before treating one Exy as a strategy rule. Used with clean before-and-after data, the cross price elasticity calculator makes substitute versus complement language quantitative.