The calculation of research benefits with linear and non-linear specifications of the demand and supply : reply

Elbasha argues that Voon and Edwards overestimated the gains from research when there is a pivotal shift in a linear supply curve and the elasticity of supply is less than unity. He says the difference in his position and ours is due to the use of different measures of producer surplus. The difference instead can be interpreted to center on the specification of the supply curve under inelastic supply. We have experience of the issue in contention being raised in other forums, and we are pleased to have the opportunity to address it.