This paper estimates the gasoline price elasticities of demand for automobile fuel efficiency in Korea to examine indirectly whether the government policy of raising fuel prices is effective in inducing less consumption of fuel, relying on a hedonic technique developed by Atkinson and Halvorsen (1984). One of the advantages of this technique is that the data for a single year, without involving variation in the price of gasoline, is sufficient in implementing this study. Moreover. this technique enables us to circumvent the multicollinearity problem, which had reduced reliability of the results in previous hedonic studies. The estimated elasticities of dam and for fuel efficiency with respect to the price of gasoline, on average, is 0.42.
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