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Revisiting Jevons's paradox of energy rebound: Policy implications and empirical evidence in consumer-oriented financial incentives from the Japanese automobile market, 2006–2016

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  • Yoo, Sunbin
  • Koh, Kyung Woong
  • Yoshida, Yoshikuni
  • Wakamori, Naoki

Abstract

While the fuel economy of Japanese automobiles has improved by 40% in the past decade, gasoline consumption in the transportation sector from 2007 to 2016 only decreased by 4%. We seek to explain this discrepancy by investigating Japanese fuel economy standards and the financial incentives given to consumers of fuel-efficient cars. To do so, this study explores whether Japanese policies caused such a rebound effect, by employing the difference-in-difference framework. We find that these policies contribute to energy rebound effect, by enabling higher fuel consumption at lower costs and thus causing higher energy usages. We provide evidence that policies can increase not only fuel usage but also fuel costs. The main driving force behind the rebound effect is the increase in the sales of hybrid vehicles, induced by financial incentives.

Suggested Citation

  • Yoo, Sunbin & Koh, Kyung Woong & Yoshida, Yoshikuni & Wakamori, Naoki, 2019. "Revisiting Jevons's paradox of energy rebound: Policy implications and empirical evidence in consumer-oriented financial incentives from the Japanese automobile market, 2006–2016," Energy Policy, Elsevier, vol. 133(C).
  • Handle: RePEc:eee:enepol:v:133:y:2019:i:c:s0301421519305105
    DOI: 10.1016/j.enpol.2019.110923
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    References listed on IDEAS

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    More about this item

    Keywords

    Hybrid electric vehicle; Rebound effect; Jevons's paradox; Energy backfires; Energy policy evaluations;

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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