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Motor fuel prices in Turkey

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  • Erdogdu, Erkan

Abstract

The world’s most expensive motor fuel (gasoline, diesel and LPG) is sold most likely in the Republic of Turkey. This paper investigates the key issues related to the motor fuel prices in Turkey. First of all, the paper analyses the main reason behind high prices, namely motor fuel taxes in Turkey. Then, it estimates the elasticity of motor fuel demand in Turkey using an econometric analysis. The findings indicate that motor fuel demand in Turkey is quite inelastic and, therefore, not responsive to price increases caused by an increase in either pre-tax prices or taxes. Therefore, fuel market in Turkey is open to opportunistic behaviour by firms (through excessive profits) and the government (through excessive taxes). Besides, the paper focuses on the impact of high motor fuel prices on road transport associated activities, including the pattern of passenger transportation, motorization rate, fuel use, total kilometers travelled and CO2 emissions from road transportation. The impact of motor fuel prices on income distribution in Turkey and Turkish public opinion about high motor fuel prices are also among the subjects investigated in the course of the study.

Suggested Citation

  • Erdogdu, Erkan, 2013. "Motor fuel prices in Turkey," MPRA Paper 55521, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:55521
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    File URL: https://mpra.ub.uni-muenchen.de/55521/1/MPRA_paper_55521.pdf
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    References listed on IDEAS

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    1. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191, December.
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    Citations

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    Cited by:

    1. Utku Özmen, Mustafa & Akçelik, Fatih, 2017. "Asymmetric exchange rate and oil price pass-through in motor fuel market: A microeconometric approach," The Journal of Economic Asymmetries, Elsevier, vol. 15(C), pages 64-75.
    2. Jeyhun I. Mikayilov & Shahriyar Mukhtarov & Hasan Dinçer & Serhat Yüksel & Rıdvan Aydın, 2020. "Elasticity Analysis of Fossil Energy Sources for Sustainable Economies: A Case of Gasoline Consumption in Turkey," Energies, MDPI, vol. 13(3), pages 1-15, February.
    3. Bakhat, Mohcine & Labandeira, Xavier & Labeaga, José M. & López-Otero, Xiral, 2017. "Elasticities of transport fuels at times of economic crisis: An empirical analysis for Spain," Energy Economics, Elsevier, vol. 68(S1), pages 66-80.
    4. Hasanov, Mübariz, 2015. "The demand for transport fuels in Turkey," Energy Economics, Elsevier, vol. 51(C), pages 125-134.
    5. Yalta, A. Talha & Yalta, A. Yasemin, 2016. "The dynamics of fuel demand and illegal fuel activity in Turkey," Energy Economics, Elsevier, vol. 54(C), pages 144-158.
    6. Halim TATLI, 2022. "Long-term price and income elasticity of residential natural gas demand in Turkey," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(630), S), pages 101-122, Spring.
    7. Tacinur AKCA, 2023. "Causal Relationship Between Transport Inflation with Oil Prices and Exchange Rates," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 10(1), pages 245-260, January.
    8. Gevrek, Z.Eylem & Uyduranoglu, Ayse, 2015. "Public preferences for carbon tax attributes," Ecological Economics, Elsevier, vol. 118(C), pages 186-197.
    9. Halim Tatli, 2019. "Factors affecting industrial coal demand in Turkey," Energy & Environment, , vol. 30(6), pages 1027-1048, September.
    10. Ozgur, Onder & Aydin, Levent & Karagol, Erdal Tanas & Ozbugday, Fatih Cemil, 2021. "The fuel price pass-through in Turkey: The case study of motor fuel price subsidy system," Energy, Elsevier, vol. 226(C).
    11. Leonid Galchynskyi, 2020. "Estimation of the price elasticity of petroleum products’ consumption in Ukraine," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 15(2), pages 315-339, June.

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    More about this item

    Keywords

    Model construction and estimation; fiscal policy; motor fuel prices;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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