High Frequency Evidence on the Demand for Gasoline

Laurence Levin, Matthew Lewis and Frank A. Wolak

American Economic Journal: Economic Policy, 2017, vol. 9, issue 3, 314-47

Abstract: Daily city-level expenditures and prices are used to estimate the price responsiveness of gasoline demand in the United States. Using a frequency of purchase model that explicitly acknowledges the distinction between gasoline demand and gasoline expenditures, the price elasticity of demand is consistently found to be an order of magnitude larger than estimates from recent studies using more aggregated data. Estimating demand using higher levels of spatial and temporal aggregation is shown to produce increasingly inelastic estimates. A decomposition is then developed and implemented to understand the relative importance of several different factors in explaining this result.

JEL-codes: C51 L71 Q35 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/pol.20140093
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Citations: View citations in EconPapers (71)

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Working Paper: High Frequency Evidence on the Demand for Gasoline (2016)
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