Gasoline, EMS and Cross-Price Elasticity of Demand in the Urban Setting

Introduction—The authors sought to identify any relationship between average monthly unleaded gasoline price and EMS demand in urban areas.

Methods—Data for this study were provided by six urban EMS agencies in North Carolina and South Carolina. Each organization reported monthly total requests for service (call volume) for January 2010 through December 2016. The average monthly price of unleaded gasoline was collected through publicly available sources. For analysis, both call volume and gasoline price were log-transformed (natural log) to derive an elasticity function. A pooled ordinary least squares model with fixed effects was utilized for tests of inference.

Results—A total of 498 observations were analyzed. Linear regression models show for a 10% increase in average gasoline price, EMS demand decreases by 0.8% (95% CI: [-1.12]–[-0.47]; p<0.001). In real terms, for each $0.01 increase in average gasoline price, the monthly demand of EMS decreases by 1.25 calls (95% CI: [-1.96]–[-0.54]; p=0.001). This results in a cross-price elasticity of -0.08, indicating a complementary but inelastic relationship between average gasoline price and EMS demand.

Conclusion—Analysis revealed a negative cross-price elasticity of demand. Gasoline price and EMS demand demonstrate an inelastic relationship.