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Evaluating the Consumer Response to Fuel Economy: A Review of the Literature

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Author Info

  • Gloria Helfand
  • Ann Wolverton

Abstract

In modeling how the U.S. market responds to changes in national fuel economy standards, the question of how consumers evaluate trade-offs between the cost of consuming more fuel economy than they would otherwise choose and the expected fuel savings that result is potentially quite important. Consumer vehicle choice models are a means to predict the change in vehicle purchase patterns, as well as the effects of these changes on compliance costs and consumer surplus. This paper surveys the literature on consumer choice models and finds a wide range in methods and results. A large puzzle raised is whether automakers build into their vehicles as much fuel economy as consumers are willing to purchase. This paper examines possible reasons why there may be a gap between the amount consumers are willing to pay for fuel economy and the amount that automakers provide. Submitted August, 2009. Resubmitted April, 2011

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File URL: http://yosemite.epa.gov/ee/epa/eed.nsf/WPNumber/2009-04/$File/2009-04.PDF
File Function: First version, 2011
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Bibliographic Info

Paper provided by National Center for Environmental Economics, U.S. Environmental Protection Agency in its series NCEE Working Paper Series with number 200904.

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Length: 62 pages
Date of creation: Apr 2011
Date of revision: Apr 2011
Handle: RePEc:nev:wpaper:wp200904

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Related research

Keywords: consumer behavior; vehicle purchase decision;

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Cited by:
  1. Hackbarth, André & Madlener, Reinhard, 2013. "Willingness-to-Pay for Alternative Fuel Vehicle Characteristics: A Stated Choice Study for Germany," FCN Working Papers 20/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  2. Chugh, Randy & Cropper, Maureen & Narain, Urvashi, 2011. "The cost of fuel economy in the Indian passenger vehicle market," Energy Policy, Elsevier, vol. 39(11), pages 7174-7183.
  3. James M. Sallee & Joel Slemrod, 2010. "Car Notches: Strategic Automaker Responses to Fuel Economy Policy," NBER Working Papers 16604, National Bureau of Economic Research, Inc.
  4. James M. Sallee, 2011. "The Taxation of Fuel Economy," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 1 - 38.
  5. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
  6. McConnell, Virginia, 2013. "The New CAFE Standards: Are They Enough on Their Own?," Discussion Papers dp-13-14, Resources For the Future.
  7. Li, Shanjun & Linn, Joshua & Muehlegger, Erich, 2012. "Gasoline Taxes and Consumer Behavior," Working Paper Series rwp12-006, Harvard University, John F. Kennedy School of Government.

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