Policy implications of the price elasticity of demand for petrol in South Africa
Date
1988
Authors
Cloete S.A.
Smit E.V.D.M.
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Abstract
Using a production function approach, the relevant long- and short-run elasticities of petrol demand were estimated and found to be markedly less than unity. The main policy conclusions were found to be that supply security regarding petrol should be a policy priority, that the price mechanism can be used to a limited extent to encourage conservation, and that cost increases can be shifted largely on to consumers, implying that price administration in some form might be justifiable from an equity viewpoint. The last conclusion, however, depends to a large extent on how motor vehicle ownership is distributed among income groups in South Africa. -from Authors
Description
Keywords
conservation, demand, motor vehicle ownership, petrol, policy implications, price elasticity, South Africa
Citation
South African Journal of Science
84
4
84
4