Template-Type: ReDIF-Paper 1.0
Author-Name: Dean Hyslop
Author-X-Name-First: Dean
Author-X-Name-Last: Hyslop
Author-Email: dean.hyslop@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Trinh Le
Author-X-Name-First: Trinh
Author-X-Name-Last: Le
Author-Email: trinh.le@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: David Maré
Author-X-Name-First: David
Author-X-Name-Last: Maré
Author-Email: david.mare@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Lynn Riggs
Author-X-Name-First: Lynn
Author-X-Name-Last: Riggs
Author-Email: lynn.riggs@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Nic Watson
Author-X-Name-First: Nic
Author-X-Name-Last: Watson
Author-Email: nicholas.watson@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Title: Domestic transport charges: Estimation of transport-related elasticities
Abstract: In order to better understand the potential effects of transport policies, it is important to understand household spending patterns across different transport-related categories as well as across different households. This study uses three distinct approaches to estimating transport elasticities for New Zealand: cross section, time series, and event studies. The estimated own-price elasticity of fuel demand ranges from –0.1 (very inelastic) based on time-series data to around –2 (very elastic) based on the event-study approach. Using cross-sectional household-level data and regional price variation, we estimate that price elasticity of petrol demand is –0.66 over all households, and ranges from –0.78 for the lowest household expenditure quintile to –0.43 for the highest expenditure quintile, indicating that petrol demand is price-inelastic, and more so for richer households. The different fuel price elasticities estimated by this study represent a range of possible consumer responses when modelling the impact of price changes.
Length: 65 pages
Creation-Date: 2023-11
File-URL: https://motu-www.motu.org.nz/wpapers/23_10.pdf
Number: 23_10
Classification-JEL: D12, R220
Keywords: price elasticities, transport demand vehicle kilometres travelled, fuel usage
Handle: RePEc:mtu:wpaper:23_10