Measuring Long-Run Gasoline Price Elasticities in Urban Travel Demand

Javier Donna

MPRA Paper from University Library of Munich, Germany

Abstract: I develop a structural model of urban travel to estimate long run gasoline price elasticities. I model the demand for transportation services using a dynamic discrete-choice model with switching costs and estimate it using a panel dataset with public market-level data on automobile and public transit use in Chicago. Long-run own- (automobile) and cross- (transit) price elasticities are substantially more elastic than short-run elasticities. Elasticity estimates from static and myopic models are downward biased. I use the estimated model to evaluate the response to several counterfactual policies. A gasoline tax is less regressive after accounting for the long-run substitution behavior.

Keywords: Long-run gasoline price elasticities; Dynamic demand; Switching Costs; Hysteresis; Consumer Inertia; Gasoline Tax Incidence (search for similar items in EconPapers)
JEL-codes: H22 H25 L43 L71 L91 L98 (search for similar items in EconPapers)
Date: 2021-05-10
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Citations: View citations in EconPapers (2)

Published in RAND Journal of Economics 74.3(2021): pp. 945-994

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Journal Article: Measuring long‐run gasoline price elasticities in urban travel demand (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121039

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