The demand for cars and gasoline: A simultaneous approach

Research output: Contribution to journalArticlepeer-review


This paper develops and estimates a simple model of the demand and supply of cars and gasoline in Israel, focusing on an individual maximizing his life-time utility function under various constraints. Particular emphasis is placed on the transaction cost in a car purchase, and the fact that cars can be characterized by size and age factors which, in turn, affect running costs and maintenance costs. The empirical results show that a change in the price of gasoline (and/or the price of new cars) changes the structure of the stock of cars with respect to engine size.

Original languageEnglish
Pages (from-to)271-287
Number of pages17
JournalEuropean Economic Review
Issue number1-3
StatePublished - Jan 1983


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