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Is there an energy paradox in fuel economy? A note on the role of consumer heterogeneity and sorting bias

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  • Bento, Antonio M.
  • Li, Shanjun
  • Roth, Kevin

Abstract

From the previous literature, it can be found that consumers tend to undervalue discounted future energy costs in their purchase decisions for energy-using durables. We show that this finding could, in part, result from ignoring consumer heterogeneity in empirical analyses as opposed to true undervaluation.

Suggested Citation

  • Bento, Antonio M. & Li, Shanjun & Roth, Kevin, 2012. "Is there an energy paradox in fuel economy? A note on the role of consumer heterogeneity and sorting bias," Economics Letters, Elsevier, vol. 115(1), pages 44-48.
  • Handle: RePEc:eee:ecolet:v:115:y:2012:i:1:p:44-48
    DOI: 10.1016/j.econlet.2011.09.034
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    References listed on IDEAS

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    5. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, January.
    6. Helfand, Gloria & Wolverton, Ann, 2011. "Evaluating the Consumer Response to Fuel Economy: A Review of the Literature," International Review of Environmental and Resource Economics, now publishers, vol. 5(2), pages 103-146, May.
    7. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
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    More about this item

    Keywords

    Energy paradox; Fuel economy; Consumer heterogeneity;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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