NATIONAL BUREAU OF ECONOMIC RESEARCH
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High Frequency Evidence on the Demand for Gasoline

Laurence Levin, Matthew S. Lewis, Frank A. Wolak

NBER Working Paper No. 22345
Issued in June 2016
NBER Program(s):Environment and Energy Economics, Industrial Organization

Daily city-level expenditures and prices are used to estimate the price responsiveness of gasoline demand in the U.S. Using a frequency of purchase model that explicitly acknowledges the distinction between gasoline demand and gasoline expenditures, we consistently find the price elasticity of demand to be an order of magnitude larger than estimates from recent studies using more aggregated data. We demonstrate directly that higher levels of spatial and temporal aggregation generate increasingly inelastic demand estimates, and then perform a decomposition to examine the relative importance of several different sources of bias likely to arise in more aggregated studies.

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Document Object Identifier (DOI): 10.3386/w22345

Published: Laurence Levin & Matthew S. Lewis & Frank A. Wolak, 2017. "High Frequency Evidence on the Demand for Gasoline," American Economic Journal: Economic Policy, vol 9(3), pages 314-347. citation courtesy of

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