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Effect of gasoline prices on car fuel efficiency: Evidence from Lebanon

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  • Marrouch, Walid
  • Mourad, Jana

Abstract

This paper explores how gasoline prices affect the sales of new and used cars in Lebanon. Using a rich dataset on monthly imported cars from 2000 to 2016, a vector autoregressive analysis is used to model different consumer choices between fuel-efficient cars, midsize cars, and fuel-inefficient cars. We report the first empirical evidence on this question from the Middle East and North Africa (MENA) region using individual automobile data. We use within sample and out-of-sample tests to examine whether gasoline prices influence the sale of fuel-efficient cars. Our results show evidence against the hypothesis that rising gasoline prices shift consumers’ demand toward the most fuel-efficient cars.

Suggested Citation

  • Marrouch, Walid & Mourad, Jana, 2019. "Effect of gasoline prices on car fuel efficiency: Evidence from Lebanon," Energy Policy, Elsevier, vol. 135(C).
  • Handle: RePEc:eee:enepol:v:135:y:2019:i:c:s0301421519305889
    DOI: 10.1016/j.enpol.2019.111001
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    More about this item

    Keywords

    Gasoline prices; Automobiles; Consumer choice; Fuel efficiency; Imports; Lebanon;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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