Solon, Orville Jose C.Vitug, Maria Fatima R.Yamat, Mara Donna A.2024-10-142024-10-142015https://selib.upd.edu.ph/etdir/handle/123456789/739Anyone can attest to the Philippines’ abnormal traffic situation. Roads are congested nearly any time of the day. While it is true that the congestion can be attributed to the lack of motorist discipline, it cannot be denied that the increasing number of private vehicles plays a big role in the situation. Buying new vehicles in the Philippines is slowly becoming the norm, thanks to attractive rates offered by competing car manufacturers. With that in mind, this study aims to extract the price elasticity of automobile demand and quantify the impact of a price increase on demand in order to aid policy-making. An OLS regression was ran to serve as a benchmark model, but its results were inconsistent due to endogeneity. To address this, a cross-panel Instrumental Variable 2SLS regression was used in order to obtain price elasticity. The estimation concluded that the price elasticity of demand for automobiles is 2.851103 which matches theory that short-run elasticity of automobiles is elastic. A progressive excise tax on automobiles may be imposed in order to curb demand for automobiles and to increase government revenue.enYolanda typhoonYolanda victimRelief operationThesis