Rational habits and uncertain prices: simulating gasoline consumption behavior
When consumers are forward-looking with respect to their demand for a habit-forming good, traditional measures of price elasticity are misleading. In particular, such measures will underestimate sensitivity to long-run shifts - and therefore underestimate the potential effect of policy instruments...
Main Author: | |
---|---|
Format: | Working paper |
Published: |
University of Oxford
2012
|