| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 310455 | Transportation Research Part A: Policy and Practice | 2012 | 19 Pages |
RELU-TRAN2, a spatial computable general equilibrium (CGE) model of the Chicago MSA is used to understand how gasoline use, car-VMT, on-the-road fuel intensity, trips and location patterns, housing, labor and product markets respond to a gas price increase. We find a long-run elasticity of gasoline demand (with congestion endogenous) of −0.081, keeping constant car prices and the TFI (technological fuel intensity) of car types but allowing consumers to choose from car types. 43% of this long run elasticity is from switching to transit; 15% from trip, car-type and location choice; 38% from price, wage and rent equilibration, and 4% from building stock changes. 79% of the long run elasticity is from changes in car-VMT (the extensive margin) and 21% from savings in gasoline per mile (the intensive margin); with 83% of this intensive margin from changes in congestion and 17% from the substitution in favor of lower TFI. An exogenous trend-line improvement of the TFI of the car-types available for choice raises the long-run response to a percent increase in the gas price from −0.081 to −0.251. Thus, only 1/3 of the long-run response to the gas price stems from consumer choices and 2/3 from progress in fuel intensity. From 2000 to 2007, real gas prices rose 53.7%, the average car fuel intensity improved 2.7% and car prices fell 20%. The model predicts that from these changes alone, keeping constant population, income, etc. aggregate gasoline use in this period would have fallen by 5.2%.
► Effects of gasoline price on urban travel and structure in a CGE model. ► Decomposing price elasticity of gas by VMT, GPM and adjustment to equilibrium. ► Effects of congestion and fuel intensity on the price elasticity of gasoline. ► Extensive (VMT) and intensive (GPM) margins in gasoline consumption. ► Rebound effects due to congestion and car fuel intensity.
