Table 1 Definition of price elasticity

To estimate the impact of taxes on specific foods, it is important to know just how responsive quantity demanded is to change in price. “Own-price elasticity” is an index that expresses this responsiveness. It is the ratio of the percentage change in quantity demanded to the percentage change in price. This should be negative, because the demand for certain products normally decreases as its price increases. If the own-price elasticity is greater than the absolute value of 1, the demand is called 'elastic’. If it is less than 1, demand is inelastic [39, 40].

A related concept is’cross-price elasticity’, which measures the change in the quantity demanded of one good in response to a change in the price of another good. It can be either positive or negative. Positive cross-price elasticity indicates that an increase in the price of X causes the demand for Y to rise. This implies that the goods are substitutes. A negative cross-price elasticity indicates that an increase in the price of X causes a decrease in the demand for Y, which implies that the goods are complements [39, 40]