High Frequency Evidence on the Demand for Gasoline

Laurence Levin, Matthew Lewis and Frank A. Wolak

No 22345, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Daily city-level expenditures and prices are used to estimate the price responsiveness of gasoline demand in the U.S. Using a frequency of purchase model that explicitly acknowledges the distinction between gasoline demand and gasoline expenditures, we consistently find the price elasticity of demand to be an order of magnitude larger than estimates from recent studies using more aggregated data. We demonstrate directly that higher levels of spatial and temporal aggregation generate increasingly inelastic demand estimates, and then perform a decomposition to examine the relative importance of several different sources of bias likely to arise in more aggregated studies.

JEL-codes: L91 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-ene, nep-mst, nep-net and nep-tre
Note: EEE IO
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Citations: View citations in EconPapers (3)

Published as Laurence Levin & Matthew S. Lewis & Frank A. Wolak, 2017. "High Frequency Evidence on the Demand for Gasoline," American Economic Journal: Economic Policy, vol 9(3), pages 314-347.

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