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Consumer Learning and Hybrid Vehicle Adoption

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  • Heutel, Garth
  • Muehlegger, Erich J.

Abstract

We study the diffusion of hybrid vehicles among consumers. Using data on sales of 11 different models over seven years, we identify the effect of the penetration rate – total cumulative hybrid sales per capita – on new hybrid purchases. The penetration rate significantly affects new purchases, and the effect differs by hybrid model. In particular, we find a positive diffusion effect from the Toyota Prius and a negative diffusion effect from the Honda Insight, with elasticities of 0.23 to 0.85 for the Prius and –0.08 to –0.32 for the Insight. This finding is consistent with our model of model–specific learning along with anecdotal evidence that early Insight models were perceived to be of lower quality than Prius models. Higher Insight penetration rates gave a negative signal about hybrid quality and inhibited rather than promoted hybrid adoption. The findings are relevant for policy designed to promote new technologies.

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Paper provided by Harvard Kennedy School of Government in its series Scholarly Articles with number 4448996.

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Date of creation: 2010
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Publication status: Published in HKS Faculty Research Working Paper Series
Handle: RePEc:hrv:hksfac:4448996

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  1. Stoneman, Paul & Kwon, Myung-Joong, 1994. "The Diffusion of Multiple Process Technologies," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(423), pages 420-31, March.
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  5. Paul Heidhues & Nicolas Melissas, 2003. "Equilibria in a Dynamic Global Game: The Role of Cohort Effects," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) SP II 2003-08, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  6. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
  7. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 45(2), pages 317-43, October.
  8. Jay Pil Choi, 1997. "Herd Behavior, the 'Penguin Effect,' and the Suppression of Informational Diffusion: An Analysis of Informational Externalities and Payoff Interdependency," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 407-425, Autumn.
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  12. H. Peyton Young, 2009. "Innovation Diffusion in Heterogeneous Populations: Contagion, Social Influence, and Social Learning," American Economic Review, American Economic Association, American Economic Association, vol. 99(5), pages 1899-1924, December.
  13. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," NBER Working Papers 7580, National Bureau of Economic Research, Inc.
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Cited by:
  1. Samuel Dastrup & Joshua S. Graff Zivin & Dora L. Costa & Matthew E. Kahn, 2011. "Understanding the Solar Home Price Premium: Electricity Generation and “Green” Social Status," NBER Working Papers 17200, National Bureau of Economic Research, Inc.
  2. Sexton, Steven E. & Sexton, Alison L., 2014. "Conspicuous conservation: The Prius halo and willingness to pay for environmental bona fides," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 303-317.

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