DEMAND FOR GASOLINE IN JAPAN

Abstract

A partial adjustment model is suggested and estimated by this study in order to explore the relationship between per capita income, price of substitute goods, and price of gasoline in Japan. The suggested model is estimated through application of the ordinary squares methods to 1957-99 time-series data. That income, price of substitute goods, price of gasoline, and previous consumption behavior are significant variables in determining gasoline consumption in Japan is suggested through study statistical analysis. In the short run, gasoline demand elasticity is inelastic with respect to income and price, 0.296 and -0.115 respectively. In the long run, however, with respect to gasoline demands, there is a tendency for income to be slightly elastic, 1.056, with price elasticity remaining inelastic, -0.411.