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Attribute substitution in household vehicle portfolios

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  • James Archsmith
  • Kenneth T. Gillingham
  • Christopher R. Knittel
  • David S. Rapson

Abstract

Roughly three quarters of vehicles are purchased into multi‐car households. We study whether households are willing to substitute attributes, such as fuel economy, across vehicles within their portfolio. We develop a novel strategy to separately identify idiosyncratic preferences for an attribute from these within‐portfolio effects. Using the universe of household vehicle registration records in California over a 6‐year period, we find that two‐car households exhibit strong substitution across vehicles when faced with an exogenous change to fuel intensity of a kept vehicle. This effect can erode a substantial portion of the benefit from major policies, such as Cash‐for‐Clunkers.

Suggested Citation

  • James Archsmith & Kenneth T. Gillingham & Christopher R. Knittel & David S. Rapson, 2020. "Attribute substitution in household vehicle portfolios," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1162-1196, December.
  • Handle: RePEc:bla:randje:v:51:y:2020:i:4:p:1162-1196
    DOI: 10.1111/1756-2171.12353
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    Cited by:

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    2. Alberini, Anna & Horvath, Marco & Vance, Colin, 2021. "Drive less, drive better, or both? Behavioral adjustments to fuel price changes in Germany," Ruhr Economic Papers 892, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Bryan Bollinger & Naim Darghouth & Kenneth Gillingham & Andres Gonzalez-Lira, 2023. "Valuing Technology Complementarities: Rooftop Solar and Energy Storage," NBER Working Papers 32003, National Bureau of Economic Research, Inc.
    4. Lucas W. Davis & James M. Sallee, 2020. "Should Electric Vehicle Drivers Pay a Mileage Tax?," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 65-94.
    5. Goetzke, Frank & Vance, Colin, 2021. "An increasing gasoline price elasticity in the United States?," Energy Economics, Elsevier, vol. 95(C).
    6. Colmenares, Gloria & Löschel, Andreas & Madlener, Reinhard, 2019. "The rebound effect and its representation in energy and climate models," CAWM Discussion Papers 106, University of Münster, Münster Center for Economic Policy (MEP).
    7. Daan Hulshof & Machiel Mulder, 2020. "Willingness to Pay for $$\hbox {CO}_2$$CO2 Emission Reductions in Passenger Car Transport," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 899-929, April.
    8. Alberini, Anna & Horvath, Marco & Vance, Colin, 2022. "Drive less, drive better, or both? Behavioral adjustments to fuel price changes in Germany," Resource and Energy Economics, Elsevier, vol. 68(C).

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    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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