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Demand for gasoline is more price-inelastic than commonly thought

  • Havranek, Tomas


    (Czech National Bank, Charles University, Prague)

  • Irsova, Zuzana

    (Charles University, Prague)

  • Janda, Karel


    (University of California, Berkeley, University ofIowa. Research Institute of Agricultural Economics and CERGEEI, Prague, Czech Republic)

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 aver- age 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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Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1118.

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Length: 20 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:are:cudare:1118
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