Among a diversity of factors influencing the number of substitutes of a good, there are four that are most important. They are the consideration of the period, the degree of luxury of the good, the market definition, and the significance of this good for budget (Colander 129). The period is meaningful because the elasticity of the good’s demand increases in case the larger time interval is taken into account. Also, there will be more substitutes in the long run than in the short run. As for the degree of luxury, it is important in the following way. More luxurious goods are less necessary and, therefore, their demand is more elastic (Colander 130). The market definition also influences demand’s elasticity. The more specific the definition, the more elastic is the demand. Consequently, goods with more specific definitions have more substitutes. Finally, the significance of a good for the budget of a person or organization has an impact on the number of substitutes (Colander 130). Thus, goods that are important for the budget have a more elastic demand than those that are less important.
Work Cited
Colander, David C. Microeconomics. 10th ed., McGraw-Hill Education, 2017.