The theory of the user cost of capital is used to estimate the demand for new and used cars in Israel. The results demonstrate that the price of operating costs must be included in the demand function. They also show that the importance of gasoline price increases with engine size. Income elasticities are higher for new than for old cars, and increase with engine size. The inevitability of further increases in gasoline prices implies a further reduction in the average size of cars and a possible decline in the number of cars in the economy unless the trend is moderated by an acceleration in economic growth. The future of the US auto industry will depend to a large extent on its ability to compete in the small- and medium-car markets. 13 references, 3 tables.

This paper describes the for exact evaluation of higher-order partial derivatives of functions of many variables without explicitly using the analytical expressions for those derivatives. We present and test the table method together with optimization methods which employ first, second and third order derivatives. The actual use of these methods proved to be easy and accurate.

Recent research has indicated that flexible forms do not always generate empirically credible elasticity estimates. In this paper we present a methodology from which we derive a new family of flexible functional forms (denoted by CES-GBC) that are richer in structure than the cost functions in current use. We use the CES-GBC form to estimate the demand for electricity under time-of-use pricing. The estimation results are encouraging. The elasticity estimates are very reasonable and the fit of the estimated equations is far superior than the more commonly used generalized Leontief, generalized square root quadratic, or any other member of the generalized Box-Cox family of cost functions.