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Estimating the supply and demand of gasoline using tax data

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Author Info

  • Coyle, David
  • DeBacker, Jason
  • Prisinzano, Richard

Abstract

We estimate supply and demand functions for the U.S. gasoline market using information from excise tax returns provided by the IRS for the period 1990–2009. We find price and income elasticities of demand similar to those found using EIA data. We find a price elasticity of supply of 0.29, which differs from the common assumption of a perfectly inelastic short-run supply curve. By using a novel data source, the analysis provides a robustness check of aggregate studies of gasoline demand and a consistent, econometric estimate of the price elasticity of gasoline supply. The results are useful in guiding tax and regulatory policies regarding gasoline consumption.

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File URL: http://www.sciencedirect.com/science/article/pii/S0140988311001411
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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 1 ()
Pages: 195-200

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:1:p:195-200

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Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: Gasoline demand; Gasoline supply; Excise taxes;

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References

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  1. West, Sarah E. & Williams, R.C.Roberton III, 2004. "Estimates from a consumer demand system: implications for the incidence of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 535-558, May.
  2. Christopher Knittel & Daniel Sperling, 2006. "Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand," Working Papers 625, University of California, Davis, Department of Economics.
  3. Lucas W. Davis & Lutz Kilian, 2009. "Estimating the Effect of a Gasoline Tax on Carbon Emissions," NBER Working Papers 14685, National Bureau of Economic Research, Inc.
  4. Zia Wadud & Daniel J. Graham & Robert B. Noland, 2010. "Gasoline Demand with Heterogeneity in Household Responses," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 47-74.
  5. Dahl, Carol A, 1979. "Consumer Adjustment to a Gasoline Tax," The Review of Economics and Statistics, MIT Press, vol. 61(3), pages 427-32, August.
  6. Ross Morrow, W. & Gallagher, Kelly Sims & Collantes, Gustavo & Lee, Henry, 2010. "Analysis of policies to reduce oil consumption and greenhouse-gas emissions from the US transportation sector," Energy Policy, Elsevier, vol. 38(3), pages 1305-1320, March.
  7. Austin, David & Dinan, Terry, 2005. "Clearing the air: The costs and consequences of higher CAFE standards and increased gasoline taxes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 562-582, November.
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Citations

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Cited by:
  1. Baaquie, Belal E., 2013. "Statistical microeconomics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(19), pages 4400-4416.
  2. Belal E. Baaquie, 2012. "Statistical Microeconomics," Papers 1211.7172, arXiv.org.
  3. Scott, K. Rebecca, 2012. "Rational habits in gasoline demand," Energy Economics, Elsevier, vol. 34(5), pages 1713-1723.
  4. Neto, David, 2012. "Testing and estimating time-varying elasticities of Swiss gasoline demand," Energy Economics, Elsevier, vol. 34(6), pages 1755-1762.

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