Demand and price uncertainty: Rational habits in international gasoline demand

K Scott

Energy, 2015, vol. 79, issue C, 40-49

Abstract: Given a rational agent, demand for a habit-forming good is sensitive to uncertainty in future prices. In particular, price uncertainty reduces both the level and the price responsiveness of demand. These two effects, which may bear heavily on the efficacy of policies to discourage consumption of harmful addictive goods, can be tested by augmenting a simple demand model with a measure of price uncertainty.

Keywords: Gasoline demand; Price elasticity; Rational habits (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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Working Paper: Demand and Price Uncertainty: Rational Habits in International Gasoline Demand (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:79:y:2015:i:c:p:40-49

DOI: 10.1016/j.energy.2014.09.066

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