Comment 116036

By kevlahan (registered) | Posted January 13, 2016 at 20:52:57 in reply to Comment 116035

Well, according to most references induced demand and latent demand are synonyms:

Latent Demand (Induced Demand) occurs when the want or desire is of which a customer/consumer is unable to satisfy.

Induced demand, or latent demand, is the phenomenon that after supply increases, more of a good is consumed.

It is just the observation that when supply is increased more of a good is consumed. I suppose you could draw a distinction with the case of a brand new good (e.g. smart phones) that induces demand for itself. But even there you could claim that there was a latent demand for being able to carry around a mobile communications device in one's pocket that was just satisfied by the new invention (you could say this of any new invention). So latent demand and induced demand are really the same thing.

Jevon's paradox is a similar phenomenon that was first observed during the industrial revolution:

"when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises because of increasing demand."

i.e. overall demand rises even though the efficiency of consumption is improved (e.g. increasing energy efficiency of machines causes an overall increase in energy consumption).

Comment edited by kevlahan on 2016-01-13 20:56:21

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