TY  - JOUR
AU  - Hughes,Jonathan E.
AU  - Knittel,Christopher R.
AU  - Sperling,Daniel
TI  - Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12530
PY  - 2006
Y2  - September 2006
UR  - http://www.nber.org/papers/w12530
L1  - http://www.nber.org/papers/w12530.pdf
N1  - Author contact info:
Jonathan E. Hughes
Department of Economics
University of Colorado at Boulder
0256 UCB
Boulder, CO 80309
Tel: 303-735-0220
E-Mail: jonathan.e.hughes@colorado.edu

Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu

Daniel Sperling
One Shields Ave
Davis, CA 95616
E-Mail: dsperling@ucdavis.edu
AB  - Understanding the sensitivity of gasoline demand to changes in prices and income has important implications for policies related to climate change, optimal taxation and national security, to name only a few. While the short-run price and income elasticities of gasoline demand in the United States have been studied extensively, the vast majority of these studies focus on consumer behavior in the 1970s and 1980s. There are a number of reasons to believe that current demand elasticities differ from these previous periods, as transportation analysts have hypothesized that behavioral and structural factors over the past several decades have changed the responsiveness of U.S. consumers to changes in gasoline prices.  In this paper, we compare the price and income elasticities of gasoline demand in two periods of similarly high prices from 1975 to 1980 and 2001 to 2006.  The short-run price elasticities differ considerably: and range from -0.034 to -0.077 during 2001 to 2006, versus -0.21 to -0.34 for 1975 to 1980.  The estimated short-run income elasticities range from 0.21 to 0.75 and when estimated with the same models are not significantly different between the two periods.
ER  -