Estimating demand for new car fuel economy in the UK 1970-2004 using a two-stage error correction model
AbstractOver the past 30 years, governments have sought to stimulate improvements in new car fuel economy to contribute to air quality, energy security and climate change goals. We analyse the demand for new car fuel economy in the UK using a two-stage econometric model to investigate the drivers of this demand in the short and long run over the period 1970-2004.We find that higher incomes and long run price changes are the main drivers to achieve improvements in fuel economy particularly for gasoline cars; and that new car fuel economy changes were scarcely induced by the Voluntary Agreement on CO2 emissions reductions adopted in the 1990s. We find that the demand for fuel economy is price inelastic for both fuels, in agreement with other studies. Our calculated long run income elasticity (gasoline with -0.31 and diesel fuels with -0.20) values are above the range of international studies for gasoline but within the range for diesel.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Cambridge, Department of Land Economics in its series Environmental Economy and Policy Research Working Papers with number 23.2007.
Date of creation: 2007
Date of revision: 2007
fuel economy policy and standards; energy policy; energy demand; resource conservation; transport policy.;
Find related papers by JEL classification:
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
- Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
- R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-21 (All new papers)
- NEP-ENE-2007-04-21 (Energy Economics)
- NEP-ENV-2007-04-21 (Environmental Economics)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Unai Pascual).
If references are entirely missing, you can add them using this form.