The demand for motor fuel should decline when its price rises, but how exactly does that happen? Do people drive less, do they drive more carefully to conserve fuel, or do they do both? To answer these questions, we use data from the German Mobility Panel from 2004 to 2019, taking advantage of...

To what extent do car buyers undervalue future fuel costs, and what does this imply for the effectiveness of alternative tax policies? To address both questions, we show it is crucial to account for consumer heterogeneity in mileage and other dimensions. We use detailed product-level data for a...