How Effective are Policies to Reduce Gasoline Consumption? Evaluating a Quasi-Natural Experiment in Spain

IEB Working Paper N. 2013/009

35 Pages Posted: 18 Oct 2013

See all articles by Javier Asensio

Javier Asensio

Universitat Autonoma de Barcelona

Andres Gomez-Lobo

University of Chile - Department of Economics

Anna Matas

Autonomous University of Barcelona

Date Written: March 11, 2013

Abstract

Using a panel of 48 provinces for four years we empirically analyze a series of temporary policies aimed at curbing fuel consumption implemented in Spain between March and June 2011. The first policy was a reduction in the speed limit in highways. The second policy was an increase in the biofuel content of fuels used in the transport sector. The third measure was a reduction of 5% in commuting and regional train fares that resulted in two major metropolitan areas reducing their overall fare for public transit. The results indicate that the speed limit reduction in highways reduced gasoline consumption by between 2% and 3%, while an increase in the biofuel content of gasoline increased this consumption. This last result is consistent with experimental evidence that indicates that mileage per liter falls with an increase in the biofuel content in gasolines. As for the reduction in transit fares, we do not find a significant effect for this policy. However, in specifications including the urban transit fare for the major cities in each province the estimated cross-price elasticity of the demand for gasoline - used as a proxy for car use - with respect to the price of transit is within the range reported in the literature. This is important since one of the main efficiency justification for subsidizing public transit rests on the positive value of this parameter and most of the estimates reported in the literature are quite dated.

Keywords: Fuel consumption, cross-elasticities, transport policies, biofuel

JEL Classification: Q48, R41, R48

Suggested Citation

Asensio, Javier and Gomez Lobo, Andres and Matas, Anna, How Effective are Policies to Reduce Gasoline Consumption? Evaluating a Quasi-Natural Experiment in Spain (March 11, 2013). IEB Working Paper N. 2013/009, Available at SSRN: https://ssrn.com/abstract=2341616 or http://dx.doi.org/10.2139/ssrn.2341616

Javier Asensio

Universitat Autonoma de Barcelona ( email )

Departamento de Economía Aplicada
Bellaterra, Barcelona 08193
Spain

HOME PAGE: http://selene.uab.es/fjasensio

Andres Gomez Lobo

University of Chile - Department of Economics ( email )

Diagonal Paraguay 257
Torre 26, Of. 1801
Santiago
Chile

Anna Matas (Contact Author)

Autonomous University of Barcelona ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
Spain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
14
Abstract Views
651
PlumX Metrics