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  4. August 2017
  5. High Frequency Evidence on the Demand for Gasoline

High Frequency Evidence on the Demand for Gasoline

  • Laurence Levin
  • Matthew S. Lewis
  • Frank A. Wolak
American Economic Journal: Economic Policy
vol. 9, no. 3, August 2017
(pp. 314-47)
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Abstract

Daily city-level expenditures and prices are used to estimate the price responsiveness of gasoline demand in the United States. Using a frequency of purchase model that explicitly acknowledges the distinction between gasoline demand and gasoline expenditures, the price elasticity of demand is consistently found to be an order of magnitude larger than estimates from recent studies using more aggregated data. Estimating demand using higher levels of spatial and temporal aggregation is shown to produce increasingly inelastic estimates. A decomposition is then developed and implemented to understand the relative importance of several different factors in explaining this result.

Citation

Levin, Laurence, Matthew S. Lewis, and Frank A. Wolak. 2017. "High Frequency Evidence on the Demand for Gasoline." American Economic Journal: Economic Policy, 9 (3): 314-47. DOI: 10.1257/pol.20140093

Additional Materials

JEL Classification

  • C51 Model Construction and Estimation
  • L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
  • Q35 Hydrocarbon Resources
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