prijseffect

Prijseffect is an economic concept describing how changes in the price of a good or service affect consumer choices and market outcomes. In consumer theory, a price change causes two main channels of adjustment: the substitution effect and the income effect. The substitution effect occurs because a lower price makes the good cheaper relative to other goods, leading consumers to substitute toward the cheaper option. The income effect arises because a price change effectively alters the consumer's purchasing power, enabling more or fewer purchases with the same budget.

Together these effects determine the overall price effect on quantity demanded, which for most normal goods is negative (a higher price reduces quantity demanded). The magnitude is captured by the price elasticity of demand. The decomposed effects can be analyzed using compensated (Hicksian) demand versus uncompensated (Marshallian) demand frameworks.

Prijseffect also influences revenue, pricing strategy, and market structure. In practice, the observed impact of a price change depends on factors such as income levels, substitution possibilities, consumer preferences, and competitive response. Price effects are closely linked to related concepts like cross-price effects, anticipated price changes, and signaling effects (price levels signaling quality or scarcity).

Limitations include the simplifying assumptions of ceteris paribus and rational behavior; real markets feature dynamic pricing, expectations, contractual frictions, and marketing actions that can dampen or amplify the plain price effect.

Applications include policy analysis, retail pricing, and demand forecasting. Empirical work often measures elasticity across goods and segments to quantify the expected price effect on sales or revenue.