Abstract
Abstract
This study estimates the price elasticity of demand for 90- and 95-octane gasohol in Metropolitan Lima and Callao during the period from March 2020 to December 2022. Using monthly district-level data on prices and quantities sold from Osinergmin, the analysis estimates a log-log demand specification with district and month fixed effects. The empirical strategy is complemented with robustness checks and instrumental-variable exercises based on fuel reference prices and local exposure to spatial competition among service stations. The results show a negative relationship between real prices and gasohol demand. In the full sample, the estimated elasticity is -1.50 for 90-octane gasohol and -2.20 for 95-octane gasohol. When the analysis is restricted to the 2021--2022 period, the estimated elasticities become larger in magnitude: -2.46 and -3.17, respectively. These findings suggest that gasohol demand responds to price changes, although the magnitude of the estimates should be interpreted with caution due to the exceptional context of the COVID-19 pandemic, the Fuel Price Stabilization Fund, and the temporary exemption of the Selective Consumption Tax.