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Valuing the Characteristics of Natural Gas Vehicles: An Implicit Markets Approach

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  • Walls, Margaret A

Abstract

This paper estimates the costs of a government mandate to use natural gas vehicles, focusing on the less desirable attributes that these vehicles 9 possess. A model of producer and consumer behavior in a market for a differentiated product is constructed; a hedonic price function is estimated; and consumer surplus losses from the substitution of natural gas cars for gasoline cars are calculated. These losses are found to be significant: the average per car consumer surplus loss ranges from $1100 to $3200, with 20% to nearly 50% of the loss due to changes in vehicle characteristics. The costs of such a policy appear to be greater than the environmental benefits but may not be too far out of line with the costs of alternative approaches for reducing vehicular pollution. Copyright 1996 by MIT Press.

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  • Walls, Margaret A, 1996. "Valuing the Characteristics of Natural Gas Vehicles: An Implicit Markets Approach," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 266-276, May.
    • Handle: RePEc:tpr:restat:v:78:y:1996:i:2:p:266-76
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    Cited by:

    1. Paul Dalziel & Ross Cullen & Caroline Saunders, 2002. "Ranking research records of economics departments in New Zealand: Comment," New Zealand Economic Papers, Taylor & Francis Journals, vol. 36(1), pages 113-122.
    2. Pessoa, Joao Paulo & Santos, Roberto Amaral & Chimeli, Ariaster, 2023. "Natural Gas Vehicles: Consequences to Fuel Markets and the Environment," SocArXiv 7tvgy, Center for Open Science.
    3. Axsen, Jonn & Kurani, Kenneth S., 2013. "Hybrid, plug-in hybrid, or electric—What do car buyers want?," Energy Policy, Elsevier, vol. 61(C), pages 532-543.
    4. Roberto Amaral-Santos & Ariaster Chimeli & Joao Paulo Pessoa, 2023. "Natural Gas Vehicles: Consequences to Fuel Markets and the Environment," Working Papers, Department of Economics 2023_07, University of São Paulo (FEA-USP).
    5. Ian W. H. Parry & Margaret Walls & Winston Harrington, 2007. "Automobile Externalities and Policies," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 373-399, June.
    6. Abbanat, Brian A., 2001. "Alternative Fuel Vehicles: The Case of Compressed Natural Gas (CNG) Vehicles in California Households," Institute of Transportation Studies, Working Paper Series qt13q9r34w, Institute of Transportation Studies, UC Davis.

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