Consumers' response to price increases: Evidence from gasoline markets

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 24-020

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Energy: Demand and Supply; Prices ; Transportation: General ; Industry Studies: Utilities and Transportation: Government Policy
• Subject: Demand response ; Gasoline prices ; Consumers search ; Fuel consumption

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tsanko, Ilona
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2024

Further information

• Last update: 10.03.2025, 11:43 AM CET