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Measuring global gasoline and diesel price and income elasticities

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  • Dahl, Carol A.
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    Abstract

    Price and income elasticities of transport fuel demand have numerous applications. They help forecast increases in fuel consumption as countries get richer, they help develop appropriate tax policies to curtail consumption, help determine how the transport fuel mix might evolve, and show the price response to a fuel disruption. Given their usefulness, it is understandable why hundreds of studies have focused on measuring such elasticities for gasoline and diesel fuel consumption. In this paper, I focus my attention on price and income elasticities in the existing studies to see what can be learned from them. I summarize the elasticities from these historical studies. I use statistical analysis to investigate whether income and price elasticities seem to be constant across countries with different incomes and prices. Although income and price elasticities for gasoline and diesel fuel are not found to be the same at high and low incomes and at high and low prices, patterns emerge that allow me to develop suggested price and income elasticities for gasoline and diesel demand for over one hundred countries. I adjust these elasticities for recent fuel mix policies, and suggest an agenda of future research topics.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 41 (2012)
    Issue (Month): C ()
    Pages: 2-13

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    Handle: RePEc:eee:enepol:v:41:y:2012:i:c:p:2-13

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

    Related research

    Keywords: Gasoline; Diesel; Econometric; Demand;

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    Cited by:
    1. Ladislav Kristoufek & Karel Janda & David Zilberman, 2012. "Mutual Responsiveness of Biofuels, Fuels and Food Prices," CAMA Working Papers 2012-38, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Yahya F. Anouti & Carol A. Dahl, 2014. "Rationalizing Transport Fuels Pricing Policies and Effects on Global Fuel Consumption, Emissions Government Revenues and Welfare," Working Papers 2014-01, Colorado School of Mines, Division of Economics and Business.
    3. repec:hhs:slucer:2014_006 is not listed on IDEAS
    4. Vagliasindi, Maria, 2012. "Implementing energy subsidy reforms : an overview of the key issues," Policy Research Working Paper Series 6122, The World Bank.
    5. A. Talha Yalta, 2013. "The Dynamics of Road Energy Demand and Illegal Fuel Activity in Turkey: A Rolling Window Analysis," Working Papers 1304, TOBB University of Economics and Technology, Department of Economics, revised Jul 2013.
    6. Ladislav Kristoufek & Karel Janda & David Zilberman, 2013. "Non-linear Price Transmission between Biofuels, Fuels and Food Commodities," CERGE-EI Working Papers wp481, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
    7. Taran Fæhn & Cathrine Hagem & Lars Lindholt & Ståle Mæland & Knut Einar Rosendahl, 2013. "Climate policies in a fossil fuel producing country. Demand versus supply side policies," Discussion Papers 747, Research Department of Statistics Norway.
    8. Nolan Ritter, 2012. "Beyond the Average Elasticity – Applying Quantile Panel Regression to German Household Mobility Data," Ruhr Economic Papers 0392, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    9. Wittmann, Nadine, 2014. "Regulating gasoline retail markets: The case of Germany," Economics Discussion Papers 2014-17, Kiel Institute for the World Economy.
    10. Tomas Havranek & Ondrej Kokes, 2013. "Income Elasticity of Gasoline Demand: A Meta-Analysis," Working Papers IES 2013/02, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Apr 2013.
    11. Martin de Wit & Matthew Kuperus Heun & Douglas J Crookes, 2013. "An overview of salient factors, relationships and values to support integrated energy-economic systems dynamic modelling," Working Papers 02/2013, Stellenbosch University, Department of Economics.
    12. Brännlund, Runar, 2013. "The effects on energy saving from taxes on motor fuels: The Swedish case," CERE Working Papers 2013:6, CERE - the Center for Environmental and Resource Economics.

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