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 C. Maré
Author-X-Name-First: David C.
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