Measures to Promote Green Cars: Evaluation at the car variant level

Automobile firms commonly offer multiple variants for each of their car models. Heterogeneity at the variant level is an important element to be considered when assessing attribute-based policy interventions, such as tax incentives and subsidy for green cars, because of substantial variant-level heterogeneity in the attributes within a model. This paper presents a discrete choice model of product differentiation at the variant level, and estimates the structural parameters of the econometric model using data at different levels of aggregation: model-level sales and variant-level prices and attributes. Using these estimates, this paper examines the policies to promote green cars in Japan.