Automobile Fuel Demand: A Critical Assessment of Empirical Methodologies

Many surveys have attempted to convey and synthesize the information of hundreds of studies on automobile fuel demand. In most cases, the focus has been placed in giving assessments of the most likely values of various elasticities, particularly price and income, while trying to explain the differences between results. However, given the summary characteristic of these surveys, the most popular approaches and methodologies—such as dynamic reduced‐form demand models with time‐series data—have dominated the core values obtained. The present survey focuses instead on the various approaches and methods that have been used. It reviews and classifies them, showing that there are relevant findings, raised by studies using less popular approaches, which seem to challenge some of the accepted core results in the literature. These other approaches include: co‐integration techniques, use of disaggregate data at the household level and flexible functional forms, and structural models of automobile fuel consumption.