High Frequency Evidence on the Demand for Gasoline

53 Pages Posted: 20 Jun 2016 Last revised: 23 Jul 2022

See all articles by Laurence Levin

Laurence Levin

VISA Decision Sciences

Matthew S. Lewis

Clemson University - John E. Walker Department of Economics

Frank Wolak

National Bureau of Economic Research (NBER)

Date Written: June 2016

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.

Suggested Citation

Levin, Laurence and Lewis, Matthew S. and Wolak, Frank A., High Frequency Evidence on the Demand for Gasoline (June 2016). NBER Working Paper No. w22345, Available at SSRN: https://ssrn.com/abstract=2797919

Laurence Levin (Contact Author)

VISA Decision Sciences ( email )

901 Metro Center Boulevard
Mail Stop: M3-2B
Foster City, CA 94404-277
United States

Matthew S. Lewis

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

Frank A. Wolak

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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