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Are Gasoline Demand Elasticities Different across Cities?

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  • Philippe Barla
  • Markus Herrmann
  • Carlos Ordas-Criado
  • Luis F. Miranda-Moreno

Abstract

In this paper, we examine the heterogeneity in gasoline demand price and income elasticities across 40 cities in the province of Quebec Canada using quarterly data over the 2004 to 2009 period. We reject the hypothesis of identical elasticities across markets. However, the range of values for the price elasticity, between -0.65 and -0.14, is relatively narrow and confirms that the demand for gasoline is price inelastic. We find evidence that the average price and income elasticity is somewhat larger in markets with public transportation. Furthermore, these markets experience a strong declining trend in gasoline use per capita.

Suggested Citation

  • Philippe Barla & Markus Herrmann & Carlos Ordas-Criado & Luis F. Miranda-Moreno, 2015. "Are Gasoline Demand Elasticities Different across Cities?," Cahiers de recherche CREATE 2015-4, CREATE.
    • Handle: RePEc:lvl:creacr:2015-4
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    File URL: https://www.create.ulaval.ca/sites/create.ulaval.ca/files/Publications/create2015-4.pdf
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    Cited by:

    1. Robert V. Parsons, 2021. "Canada as a Case Study for Balanced Presentation to Address Controversy on Emission Reduction Policies," Sustainability, MDPI, vol. 13(14), pages 1-21, July.

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    More about this item

    Keywords

    Gasoline demand; price and income elasticities; random coefficient model; peak car hypothesis;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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