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Are the rich reaching saturation: Income and fuel price elasticities of car ownership and use

Carl Berry & Maria Börjesson

Economics of Transportation2026https://doi.org/10.1016/j.ecotra.2026.100448article
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0.50

Abstract

We estimate the income and fuel price elasticities of household vehicle kilometres travelled (VKT) and car ownership. To model the VKT, we apply a discrete-continuous model on registrAy micro panel data, covering all Swedish households from 1999 to 2018. We model two joint choices: car ownership and VKT conditional on car ownership, where the elasticity of VKT from these two choices are obtained by using the Two-Part model. We account for unobserved household effects using a correlated random effects specification and take household adjustments into account by including lagged values of fuel prices and income. Our preferred model yields a long-run income elasticity of 0.45 for private VKT, where close to two-thirds of the effect comes from the income elasticity of car ownership. The long-run fuel price elasticity of private VKT is −1.03, with the response in VKT among car owners being larger than the response in car ownership.

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https://doi.org/https://doi.org/10.1016/j.ecotra.2026.100448

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@article{carl2026,
  title        = {{Are the rich reaching saturation: Income and fuel price elasticities of car ownership and use}},
  author       = {Carl Berry & Maria Börjesson},
  journal      = {Economics of Transportation},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.ecotra.2026.100448},
}

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