Do Gasoline Demand Elasticities Vary?: Comment

The author demonstrates that estimates made in an earlier article by Carol Dahl on the constancy of price elasticity of world gasoline demand have some econometric problems because of two variables used in the estimation. Dahl assumes the exogeneity of gasoline prices on two bases: (1) each country is a small share of the world market, and world gasoline market is competitive with unrestricted trade; and (2) most developing countries had government petroleum product price controls during the period under consideration. The author finds these two assumptions irrelevant and recommends disregarding the countries and time periods. Dahl responds that professional consensus and statistical evidence does not warrant making these omissions on the grounds of bias. 19 references, 2 figures.