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Demand for gasoline is more price-inelastic than commonly thought

Tomas Havranek (), Zuzana Irsova () and Karel Janda ()

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: 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.

Keywords: gasoline demand; price elasticity; meta-analysis; publication selection bias; Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2011-09-01
New Economics Papers: this item is included in nep-ene, nep-hme and nep-tre
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Journal Article: Demand for gasoline is more price-inelastic than commonly thought (2012) Downloads
Working Paper: Demand for gasoline is more price-inelastic than commonly thought (2011) Downloads
Working Paper: Demand for Gasoline Is More Price-Inelastic than Commonly Thought (2011) Downloads
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