Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289454 
Authors: 
Year of Publication: 
2024
Series/Report no.: 
ZEW Discussion Papers No. 24-020
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
Understanding how consumers respond to price increases is key when designing price-related policies. Using microdata on vehicle usage and paid fuel prices, I analyze consumers' response, focusing on three channels of mitigation: distance driven, fuel efficiency, and search. On average, consumers mitigate 38 percent of a price increase through these channels. Reducing distance driven is the primary channel of mitigation. Increased search efforts mitigate up to 11 percent of a price increase. Response levels vary significantly with newer vehicles' owners mitigating up to 88 percent of a price increase, while older vehicle owners achieve can mitigate up to 45 percent.
Subjects: 
Demand response
Gasoline prices
Consumers search
Fuel consumption
JEL: 
D12
Q41
L91
L98
Document Type: 
Working Paper

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