Gasoline Demand in the Different Regions of Sweden

Abstract

In this thesis, we study the price and income elasticities of gasoline demand in the different regions of Sweden. By collecting data for each region in the period between 2002-2017 we try to derive these elasticities. The purpose of this is to contribute to the understanding of the distributional effect in Sweden when the gasoline price increases. We expected higher price elasticities in absolute values in the more urban regions, and lower price elasticities in the more rural regions. Lower income elasticities were also expected to be found in regions with relatively high income, while higher income elasticities would be found in the regions with relatively low income. The estimates derived for each region do not confirm these patterns. However, when instead estimating the elasticities for groups of regions (according to their population densities), the price elasticities found are in expected ranges. The income elasticities that are found are still partly counterintuitive though. We discuss our results and provide some research avenues for better estimation.