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The Responsiveness of Fuel Demand to Gasoline Price in Passenger Transport

Walid Matar ()

Discussion Papers from King Abdullah Petroleum Studies and Research Center

Abstract: Empirical estimates of fuel demand changes to price variation are based on historical consumption and prices, and can be applied as a single point estimate to a wide range of price movements. However, if fuel prices are set outside the boundaries of historical changes, policymakers may be concerned as to the validity of the empirically assessed price elasticity. We have developed a transport model to provide a techno-economic estimate of the price elasticity of fuel demand. It incorporates consumers’ choices as a result of several factors, including fuel substitutes, available transport modes, income, value of time and magnitude of price change.

Keywords: Economic Modeling; Fuel Demand; Fuel Price; Fuel Substitutes; Policy Development; Price Elasticity; Transportation (search for similar items in EconPapers)
Pages: 28
Date: 2016-06-26
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