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No Need for Speed: Fuel Prices, Driving Speeds, and the Revealed Value of Time on the German Autobahn

Author

Listed:
  • Thomas Hagedorn

    (Institute of Transport Economics, Muenster)

  • Till Kösters

    (Institute of Transport Economics, Muenster)

  • Jan Wessel

    (Institute of Transport Economics, Muenster)

  • Sebastian Specht

    (Institute of Transport Economics, Muenster)

Abstract

We estimate the relationship between fuel prices and driving speeds on the German Autobahn. The speed price elasticities are higher on sections without a speed limit (-0.047) than on those with a limit (-0.033), thus underlining the distortionary effect of speed limits on previously estimated elasticities. We also find higher elasticities when drivers are alone on the road, for high prices, and slower drivers. Based on the undistorted speed price elasticities, we estimate the short-run fuel demand elasticity and the revealed value of time (20.71 Euro/h; 83% of gross wage), hence providing valuable input for policymakers and infrastructure planning.

Suggested Citation

  • Thomas Hagedorn & Till Kösters & Jan Wessel & Sebastian Specht, 2023. "No Need for Speed: Fuel Prices, Driving Speeds, and the Revealed Value of Time on the German Autobahn," Working Papers 39, Institute of Transport Economics, University of Muenster.
    • Handle: RePEc:mut:wpaper:39
    as

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    File URL: https://www.wiwi.uni-muenster.de/ivm/sites/ivm/files/documents/forschung/diskussionspapiere/workingpaper39.pdf
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    References listed on IDEAS

    as
    1. DeSerpa, A C, 1971. "A Theory of the Economics of Time," Economic Journal, Royal Economic Society, vol. 81(324), pages 828-846, December.
    2. Gillingham, Kenneth & Munk-Nielsen, Anders, 2019. "A tale of two tails: Commuting and the fuel price response in driving," Journal of Urban Economics, Elsevier, vol. 109(C), pages 27-40.
    3. Ellwanger, Reinhard & Snudden, Stephen, 2023. "Forecasts of the real price of oil revisited: Do they beat the random walk?," Journal of Banking & Finance, Elsevier, vol. 154(C).
    4. Dahl, Carol & Sterner, Thomas, 1991. "Analysing gasoline demand elasticities: a survey," Energy Economics, Elsevier, vol. 13(3), pages 203-210, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Findenegg, Jakob & Wessel, Jan, 2024. "Pump or pedal? The impact of fuel prices on cycling in Germany," Transportation Research Part A: Policy and Practice, Elsevier, vol. 186(C).

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    More about this item

    Keywords

    fuel prices; speed price elasticity; no speed limit; short-run fuel demand elasticity; value of time; German Autobahn;
    All these keywords.

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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