Advertisement

Redistributive Effects of Gasoline Prices

  • Demet Yilmazkuday
  • Hakan YilmazkudayEmail author
Article

Abstract

Consumers face significantly different gasoline prices across gas stations. Using gasoline price data obtained from 98,753 gas stations within the U.S., it is shown that such differences can be explained by a model utilizing the gasoline demand of consumers depending on their income and commuting distance/time, where the pricing strategies of both gas stations and refiners are taken into account. The corresponding welfare analysis shows that there are significant redistributive effects of gasoline price changes among consumers, where the welfare costs of an increase in gasoline prices are found to be higher for lower income consumers.

Keywords

Gasoline prices Gas-station level analysis United states 

Notes

References

  1. Abrantes-Metz R, Froeb L, Geweke J, Taylor C (2006) A variance screen for collusion. Int J Ind Organ 24:467–486CrossRefGoogle Scholar
  2. Beresteanu A, Li S (2011) Gasoline prices, government support, and the demand for hybrid vehicles in the United States. Int Econ Rev 52(1):161–182CrossRefGoogle Scholar
  3. Chandra A, Tappata M (2011) Consumer search and dynamic price dispersion: An application to gasoline markets. RAND J Econ 42(4):681–704CrossRefGoogle Scholar
  4. De Palma A, Lindsey R (2004) Congestion pricing with heterogeneous travelers: A general-equilibrium welfare analysis. Netw Spatial Econ 4(2):135–160CrossRefGoogle Scholar
  5. Doyle JJ, Samphantharak K (2008) $200 Gas! Studying the effects of a gas tax moratorium. J Public Econ 92:869–884CrossRefGoogle Scholar
  6. Edelstein P, Kilian L (2009) How sensitive are consumer expenditures to retail energy prices? J Monet Econ 56(6):766–779CrossRefGoogle Scholar
  7. Foote C L, Little J S (2011) Oil and the macroeconomy in a changing world: A conference summary. Federal Reserve Bank of Boston, Public Policy Discussion PapersGoogle Scholar
  8. Fujii S, Kitamura R (2004) Drivers’ mental representation of travel time and departure time choice in uncertain traffic network conditions. Netw Spatial Econ 4 (3):243–256CrossRefGoogle Scholar
  9. Havranek T, Irsova Z, Janda K (2012) Demand for gasoline is more price-inelastic than commonly thought. Energy Econ 34(1):201–207CrossRefGoogle Scholar
  10. Hosken DS, McMillan RS, Taylor CT (2008) Retail gasoline pricing: What do we know?. Int J Ind Organ 26(6):1425–1436CrossRefGoogle Scholar
  11. Jian S, Rey D, Dixit V (2018) An integrated supply-demand approach to solving optimal relocations in station-based carsharing systems. Networks and Spatial Economics, forthcomingGoogle Scholar
  12. Jiménez J L, Perdiguero J (2011) Does accessibility affect retail prices and competition? An empirical application. Netw Spatial Econ 11(4):677–699CrossRefGoogle Scholar
  13. Kayser H (2000) Gasoline demand and car choice: estimating gasoline demand using household information. Energy Econ 22:331–348CrossRefGoogle Scholar
  14. Lin C -Y C, Prince L (2013) Gasoline price volatility and the elasticity of demand for gasoline. Energy Econ 38:111–117CrossRefGoogle Scholar
  15. Liu W (2014) Modeling gasoline demand in the United States: A flexible semiparametric approach. Energy Econ 45:244–253CrossRefGoogle Scholar
  16. Ma Y, Ailawadi K L, Gauri D, Grewal D (2011) An empirical investigation of the impact of gasoline prices on grocery shopping behavior. J Mark 75:18–35CrossRefGoogle Scholar
  17. Myers C K, Close G, Fox L, Meyer W, Niemi M (2011) Retail redlining: Are gasoline prices higher in poor and minority neighborhoods?. Econ Inq 49(3):795–809CrossRefGoogle Scholar
  18. Oke O, Huppmann D, Marshall M, Poulton R, Siddiqui S (2018) Multimodal transportation flows in energy networks with an application to crude oil markets. Networks and Spatial Economics, forthcomingGoogle Scholar
  19. Pitts R, Willenborg J, Sherrell D (1981) Consumer adaptation to gasoline price increases. J Consum Res 8(3):322–330CrossRefGoogle Scholar
  20. Sabir M, Van Ommeren J, Koetse M, Rietveld P (2011) Adverse weather and commuting speed. Netw Spatial Econ 11(4):701–712CrossRefGoogle Scholar
  21. Spiller E, Stephens HM (2012) The heterogeneous effects of gasoline taxes: why where we live matters, Resources for the future discussion paper (12–30)Google Scholar
  22. Weber B, Jensen L (2004) Poverty and place: A critical review of rural poverty literature, RUPRI rural policy research center, RPRC working paper 04–03Google Scholar
  23. Xiao F E, Qian Z S, Zhang H M (2011) The morning commute problem with coarse toll and nonidentical commuters. Netw Spatial Econ 11(2):343–369CrossRefGoogle Scholar
  24. Yilmazkuday D, Yilmazkuday H (2016) Understanding gasoline price dispersion. Ann Reg Sci 57(1):223–252CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of EconomicsFlorida International UniversityMiamiUSA

Personalised recommendations