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Environmental Information and The Demand for Super Unleaded Petrol in the United Kingdom

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  • Roger Fouqet

    (Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey)

Abstract

This paper tests and supports the hypothesis that information provided by the media about the environmental effects of benzene had a significant impact on the demand for super unleaded petrol in the United Kingdom between 1991 and 1995, explaining in part the large drop in demand at the end of 1994. The study uses a data set, including two specially created series measuring the provision of information about lead and benzene, and the cointegration approach to estimate the relationship between demand and its potential determinants. It finds that the additional provision of information about benzene significantly reduces the demand for super unleaded. Although of an exploratory and speculative nature, the study suggests that consumers do not always free-ride from taking account of negative externalities associated with their actions and that policy-makers might use the provision of information as a complement to our substitute for other policies internalising negative externalities.

Suggested Citation

  • Roger Fouqet, 1997. "Environmental Information and The Demand for Super Unleaded Petrol in the United Kingdom," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 90, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  • Handle: RePEc:sur:seedps:90
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    File URL: http://www.seec.surrey.ac.uk/Research/SEEDS/SEEDS90.pdf
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    References listed on IDEAS

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    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    2. Kremers, Jeroen J M & Ericsson, Neil R & Dolado, Juan J, 1992. "The Power of Cointegration Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 325-348, August.
    3. Bacon, Robert W., 1991. "Rockets and feathers: the asymmetric speed of adjustment of UK retail gasoline prices to cost changes," Energy Economics, Elsevier, vol. 13(3), pages 211-218, July.
    4. Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 305-339.
    5. Salkever, David S., 1976. "The use of dummy variables to compute predictions, prediction errors, and confidence intervals," Journal of Econometrics, Elsevier, vol. 4(4), pages 393-397, November.
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