Abstract

This study estimated national and regional-level gasoline and diesel demand elasticities in Sweden using county level panel data from 2001 to 2018. The estimated elasticities were used to calculate county cost effect of the Swedish CO2 emission reduction policy in the transport sector. The national-level elasticities were estimated by employing general method of moments (GMM) estimators, while county-level elasticities were calculated by considering the weight of each fuel type share at county and national levels. Own prices, per capita income, and per capita vehicle stocks were statistically significant at national level in determining gasoline and diesel demand. The calculated regional price elasticities showed variation between counties, with the highest being almost 4 times higher than the lowest in absolute terms. A simulation of fuel taxes to achieve the Swedish 2030 emission target for the transport sector under the national and regional price elasticities indicated minor differences at the national level with respect to CO2 taxes, costs and regressivity in the taxes. The results showed considerable differences at the regional level where costs and carbon tax payments can be considerably higher for some counties with the use of national price elasticities and the opposite is the case for other counties.

Keywords

Fuel demand; Carbon; Elasticity; Dynamic; Region; Sweden

Published in

Energy Policy
2020, Volume: 144, article number: 111648
Publisher: ELSEVIER SCI LTD

SLU Authors

• Tirkaso, Wondmagegn Tafesse

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Gren, Ing-Marie

  • Department of Economics, Swedish University of Agricultural Sciences
    

Sustainable Development Goals

Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation


UKÄ Subject classification

Economics


Publication identifier

DOI: https://doi.org/10.1016/j.enpol.2020.111648

Permanent link to this page (URI)

https://res.slu.se/id/publ/107826