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Jun 10, 2024 · If gas prices increase but consumers think that this increase is likely to be temporary, then people will drive less, but the demand for cars will be little affected. Conversely, if gas prices increase and consumers expect them to stay high for some years, we see a much bigger effect on the demand for automobiles.
Oct 1, 2008 · inventory: demand for high-consumption vehicles (i.e. SUVs) is down, and demand for gas-efficient cars (i.e. hybrids) is up. Quantifying the impact of gas prices on vehicle choice is the subject of many studies in the literature. Those studies have typically investigated the short-term effects of gas price changes on customer behavior.
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May 18, 2022 · "The whole idea of the traditional economic 'the price goes up, people buy less' doesn't really apply when it comes to gas," Clarence Woudsma said from his van at 8 a.m. one day last week as he ...
Conversely, if gas prices increase and consumers expect them to stay high for some years, we see a much bigger effect on the demand for automobiles. The gas price increase in 2008 coincided with an intense battle between Senator Hilary Clinton and Senator Barack Obama for the Democratic presidential nomination.
- What Is The Price Elasticity of Gasoline Demand?
- The Conventional View
- New Estimation Methods, New Data
- Reconciling These Findings with Earlier Work
- What Explains The Responsiveness of Consumers?
There is evidence that periods of rising real gasoline prices are associated with reduced gasoline consumption. The price elasticity of gasoline demand is a widely used measure of the responsiveness of gasoline consumption to a change in gasoline prices that is not driven by demand. An elasticity value of -1, for example, means that for every 1 per...
A large body of empirical literature dating back to the 1970s and 1980s has reported estimates of the short-run price elasticity of gasoline demand. Some of these studies rely on time series data of gasoline usage and average prices at the national level. Other studies exploit variation in gasoline prices across regions or countries. There is a wid...
As improved estimation methods have been developed and as higher-quality data have become available, longstanding estimates have been called into question. One new development has been an increasing recognition of the importance of isolating variation in gasoline prices that is not driven by consumers’ demand for gasoline. In one of the first studi...
Thus, recent estimates of the short-run price elasticity of gasoline demand are five to 25 times larger than traditional estimates. An obvious question is why do economists disagree so much on this important question? The analysis by Levin and his coauthors provides valuable clues. They document that estimating the gasoline demand elasticity based ...
The interesting economic question is why the fuel consumption responses are so strong. Clearly, in the short run, consumers won’t choose to replace their vehicle with a more fuel-efficient one. There are other margins of adjustment, however. For example, consumers may reduce their discretionary driving. The data in the study by Knittel and Tanaka f...
Dec 15, 2014 · Price elasticity measures the responsiveness of demand to changes in price. Almost all price elasticities are negative: an increase in price leads to lower demand, and vice versa. Air travel, especially for vacation, tends to be highly elastic: a 10% increase in the price of air travel leads to an even greater (more than 10%) decrease in the amount of air travel.
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Aug 29, 2023 · How Do Gas Prices Affect Car Sales Prices? The most obvious answer to this question is the interrelatedness of cars and gas. For the longest time, vehicles have relied on gas to run and both markets have been complimentary, mostly. For instance, in 2008, there was an unprecedented surge in gas prices and that led to a sharp fall in automobile ...
