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Estimation of Gasoline Demand Elasticity in Iran

Tavakoli, Amir Hossein | 2018

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 51014 (44)
  4. University: Sharif University of Technology
  5. Department: Economic Sciences
  6. Advisor(s): Rahmati, Mohammad Hossein; Vesal, Mohammad
  7. Abstract:
  8. The price elasticity of gasoline demand is a key parameter in evaluation of various policy options. However, most of the literature uses aggregate data to identify this elasticity. Temporal and spatial aggregation make elasticity estimates unreliable. We employ a unique dataset of all gasoline transactions in Iran during a four-month period around an unexpected exogenous price change to identify price elasticity. After controlling for date and individual fixed effects we estimate a robust significant price elasticity of -0.127. Aggregation of the same data by week, month, and city yields an estimate of -0.3 indicating a significant bias in earlier studies. We also identify a significant withholding behavior by consumers in response to anticipated price changes
  9. Keywords:
  10. Subsidy ; Demand Elasticity ; Gasoline ; Demand Price Elasticity ; Transaction Level Data ; Withholding Behavior