Gasoline Demand in Middle-Income Countries

Among the policy tools available to restrict emissions from road transport are price-based instruments. To accurately gauge their effect, accurate measures of gasoline elasticities are needed. A large literature is devoted to determining the price and income elasticities related to gasoline. Using recently developed quantile regression tools on a panel of middle-income countries, we assess the heterogeneity in gasoline consumption in response to changes in gasoline prices. The estimated median elasticities are -0.7 and 0.511 for the price and income elasticities respectively. An interesting finding is the case of jointly increasing incomes and prices reduces gasoline consumption at the median while at lower quantiles this may increase gasoline consumption. This finding shows that using quantile regression offers valuable benefits for policy makers who need a thorough understanding of the markets for gasoline to evaluate various policies.