An Analysis of the Private and Commercial Demand for Gasoline

P REVIOUS studies, Houthakker and Taylor (1970), Phlips (1972), and Houthakker and Verleger (1973), on the demand for gasoline have concentrated on the private consumer demand at least with respect to model formulation, although it is not clear that the data used in these studies were so restricted. These models have been specified as single equations involving short-run dynamic linear adjustments. In terms of the regressions actually run, the main effect has been to introduce lagged values of the dependent variable. Very little attention has been paid to prices other than own price. Our approach in this paper is to formulate the model in terms of a simultaneous equation system, to pay particular attention to relative prices in addition to own price and income, and to separate the demand by households from that by commercial (truck) users.