System Analysis Gasoline Demand and Estimating the Price Elasticity in the Province of Tehran

Abstract

The increasing use of cars in human life caused growth and development, but with the pervasive use of these vehicles, especially for personal use, it caused problems and harmful effects on health, economy and the environment. large parts of these effects are because of the amount and the way of energy consumption. To manage the fuel consumption, especially in the transportation sector, at first, it is necessary to extract the mechanism of consumption forming and then try to improve it. System Dynamics (SD) are the most important tools used in management and analysis and solving major economic issues. In this paper, first, by using Causal Loop Diagram (CLD), structure and variables affecting amounts of gasoline consumption are shown. In the next step validation of the simulation model is analyzed and after model validation, the price elasticity of gasoline demand of Tehran province is computed. This elasticity for short and long-term are -0.092 and 0.129, respectively. Calculated elasticites in this study decreased rather than previous research, these results refer to less proportion of gasoline price to individual incomes and higher need for transportation in Tehran.

Keywords

• gasoline price
• gasoline demand
• price elasticity of demand
• system dynamics (sd)