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Demand for gasoline is more price-inelastic than commonly thought

  • Havranek, Tomas
  • Irsova, Zuzana
  • Janda, Karel

One of the most frequently examined statistical relationships in energy economics has been the price elasticity of gasoline demand. We conduct a quantitative survey of the estimates of elasticity reported for various countries around the world. Our meta-analysis indicates that the literature suffers from publication selection bias: insignificant or positive estimates of the price elasticity are rarely reported, although implausibly large negative estimates are reported regularly. In consequence, the average published estimates of both short- and long-run elasticities are exaggerated twofold. Using mixed-effects multilevel meta-regression, we show that after correction for publication bias the average long-run elasticity reaches −0.31 and the average short-run elasticity only −0.09.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 1 ()
Pages: 201-207

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:1:p:201-207
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