Abstract
Demand equations are estimated for three age groups of the U.S. population utilizing consumer expenditure data and gasoline prices. To account for the introduction of large vehicles into the market a truck variable is included in the model. Simultaneity is corrected by running a two-stage least square model using the crude oil price as a supply shifter. The estimated elasticities suggest that retirees have the most elastic demand function for gasoline, and workers have a demand function which is considerably less elastic that retirees, confirming the hypotheses of this paper.
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