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Heterogeneity in price elasticity of vehicle kilometers traveled: Evidence from micro-level panel data

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  • Tilov, Ivan
  • Weber, Sylvain

Abstract

This article presents an empirical estimation of the effect of fuel prices on vehicle kilometers traveled (VKT) using a panel dataset of 1560 Swiss households over the period 2018–2021. Elasticities are estimated for different segments of households, based on their socio-demographic and vehicle characteristics, as well as on their driving intensity. Our results, based on fixed-effect, instrumental variable, and quantile regression models, indicate relatively large price elasticities and reveal heterogeneity in price sensitivity. Single-member households appear significantly more responsive to price than multiple-member households. Travel-intensive households do respond to changes in gasoline price, while less intensive drivers do not exhibit statistically significant price elasticities. For household segments who do not react to price, tailored non-price measures would be a useful complement to fuel taxes in order to reduce distance traveled and/or avoid imposing too strong a financial burden.

Suggested Citation

  • Tilov, Ivan & Weber, Sylvain, 2023. "Heterogeneity in price elasticity of vehicle kilometers traveled: Evidence from micro-level panel data," Energy Economics, Elsevier, vol. 127(PA).
    • Handle: RePEc:eee:eneeco:v:127:y:2023:i:pa:s0140988323005765
    DOI: 10.1016/j.eneco.2023.107078
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    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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