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Consumers’ willingness to pay for green cars: a discrete choice analysis in Italy

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  • Ericka Costa

    (University of Trento)

  • Dario Montemurro

    (Luxottica Group S.p.a)

  • Diego Giuliani

    (University of Trento)

Abstract

In September 2015, the Volkswagen Group was involved in a massive scandal regarding vehicles’ emissions of substances harmful to the environment. This scandal, known as Dieselgate, caused a commotion in the automotive sector and raised the question of whether or not there exists consumer demand for cleaner cars. This paper aims to investigate consumers’ willingness to pay a premium price for lower CO2 emitting cars. To do so, it adopts a discrete choice methodological approach and an exploratory survey involving 278 potential Italian car buyers. The results provide strong support for the primary hypothesis of the research that consumers are willing to pay more for cleaner vehicles, as expressed by a positive marginal willingness to pay for lower emissions. Potential car buyers indeed appear willing to pay a price premium of about € 2100 for a 20% CO2 reduction per kilometre from the current standard level that car industry has to comply with. In particular, we estimate a willingness to pay approximately € 88 for 1-g of CO2 reduction per kilometre (with a 95% confidence interval ranging between € 54 and € 122).

Suggested Citation

  • Ericka Costa & Dario Montemurro & Diego Giuliani, 2019. "Consumers’ willingness to pay for green cars: a discrete choice analysis in Italy," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(5), pages 2425-2442, October.
    • Handle: RePEc:spr:endesu:v:21:y:2019:i:5:d:10.1007_s10668-018-0141-z
    DOI: 10.1007/s10668-018-0141-z
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    2. Wolf Rogowski & Wolfram Elsner, 2021. "How economics can help mitigate climate change - a critical review and conceptual analysis of economic paradigms," Bremen Papers on Economics & Innovation 2106, University of Bremen, Faculty of Business Studies and Economics.
    3. Chiambaretto, Paul, 2021. "Air passengers’ willingness to pay for ancillary services on long-haul flights," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 147(C).
    4. Paul Chiambaretto, 2021. "Air passengers’ willingness to pay for ancillary services on long-haul flights," Post-Print hal-03514785, HAL.
    5. Bansal, Prateek & Kumar, Rajeev Ranjan & Raj, Alok & Dubey, Subodh & Graham, Daniel J., 2021. "Willingness to pay and attitudinal preferences of Indian consumers for electric vehicles," Energy Economics, Elsevier, vol. 100(C).
    6. Daniel Francisco Pais & António Cardoso Marques & José Alberto Fuinhas, 2023. "How to Promote Healthier and More Sustainable Food Choices: The Case of Portugal," Sustainability, MDPI, vol. 15(4), pages 1-23, February.
    7. Yuting Cui & Raphael Lissillour & Juraj Chebeň & Drahoslav Lančarič & Chunlin Duan, 2022. "The position of financial prudence, social influence, and environmental satisfaction in the sustainable consumption behavioural model: Cross‐market intergenerational investigation during the Covid‐19 ," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 996-1020, July.
    8. Prateek Bansal & Rajeev Ranjan Kumar & Alok Raj & Subodh Dubey & Daniel J. Graham, 2021. "Willingness to Pay and Attitudinal Preferences of Indian Consumers for Electric Vehicles," Papers 2101.08008, arXiv.org, revised May 2021.

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