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Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data

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  • Christopher R. Knittel
  • Shinsuke Tanaka

Abstract

We use novel microdata on on-road fuel consumption and prices paid for fuel in Japan to estimate short-run price elasticities of demand for gasoline consumption. We have three main findings. First, our elasticity estimates of roughly -0.37 are in orders of magnitude larger than previously estimated using more aggregate data. Second, we are one of the first papers to separately estimate both the price elasticities of miles driven (-0.30) and on-road fuel economy (0.07). Lastly, we find that on-road fuel economy is determined by recent prices than distant past prices paid, suggesting limited habit formation of fuel-conserving driving behaviors.

Suggested Citation

  • Christopher R. Knittel & Shinsuke Tanaka, 2019. "Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data," NBER Working Papers 26488, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26488
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    References listed on IDEAS

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    Cited by:

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    3. Huang, Robert & Kahn, Matthew E., 2024. "An economic analysis of United States public transit carbon emissions dynamics," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    4. Matthew E. Kahn & Somik Lall, 2022. "Will the Developing World’s Growing Middle Class Support Low Carbon Policies?," NBER Working Papers 30238, National Bureau of Economic Research, Inc.
    5. Prest, Brian C. & Fell, Harrison & Gordon, Deborah & Conway, TJ, 2024. "Estimating the emissions reductions from supply-side fossil fuel interventions," Energy Economics, Elsevier, vol. 136(C).
    6. Michael Pollitt & Geoffroy Dolphin, 2021. "Should the EU ETS be extended to road transport and heating fuels?," Working Papers EPRG2119, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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