Elasticity of demand for gasoline in Sweden

Policy measures in the transport sector have been widely debated during the recent decades, specifically in terms of increasing carbon emissions from passenger transport. Fuel taxes is receiving most receptive consideration by governments, although households tend to respond little to these measures, especially in rural regions. The aim of this paper, which focuses at the gasoline consumption among households, is to develop a model to estimate price and income elasticities in rural and urban regions in Sweden. While obtaining overall price elasticity to be within the range of previous studies, I find that there is a significant variation in price elasticities across regions. As a consequence, these differences might result in unwanted distributive effects.