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The principal-agent problem and transport energy use: Case study of company lease cars in the Netherlands

  • Graus, Wina
  • Worrell, Ernst
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    Barriers exist for improvement of energy efficiency, of which the principal-agent problem is considered an important one. The principal-agent problem is a potential barrier for energy policies based on economic instruments, as the decision maker may be partially insulated from the price signal given by such policies. We estimate the size and the impact of the principal-agent problem for cars provided by companies as a benefit to employees in the Netherlands. Of all passenger cars in the Netherlands, 11% is classified as company cars, which consume 21% of the total energy consumption by passenger cars. As company cars are newer, operate more diesel engines, but are also larger, the fuel efficiency is slightly worse than that of private cars. Company cars seem to drive longer distances for commuting than the national average of private cars. Together, this might result in a net 1-7% increase of all fuel use of passenger cars in the Netherlands. This indicates that there is potential to reduce energy consumption of company cars and a need for policies aimed at improving energy efficiency of company cars.

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    File URL: http://www.sciencedirect.com/science/article/B6V2W-4T6KFGX-4/2/e08dee9c5f444bc30a4389a65f98db23
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    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 36 (2008)
    Issue (Month): 10 (October)
    Pages: 3745-3753

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    Handle: RePEc:eee:enepol:v:36:y:2008:i:10:p:3745-3753
    Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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    1. Jonathan G. Koomey & Alan H. Sanstad & Leslie J. Shown, 1996. "Energy-Efficient Lighting: Market Data, Market Imperfections, And Policy Success," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 98-111, 07.
    2. Stephen Decanio, 1994. "Agency and Control Problems in US Corporations: The Case of Energy-efficient Investment Projects," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(1), pages 105-124.
    3. B. Howarth, Richard & Haddad, Brent M. & Paton, Bruce, 2000. "The economics of energy efficiency: insights from voluntary participation programs," Energy Policy, Elsevier, vol. 28(6-7), pages 477-486, June.
    4. Farla, Jacco C.M & Blok, Kornelis, 2000. "The use of physical indicators for the monitoring of energy intensity developments in the Netherlands, 1980–1995," Energy, Elsevier, vol. 25(7), pages 609-638.
    5. DeCanio, Stephen J., 1993. "Barriers within firms to energy-efficient investments," Energy Policy, Elsevier, vol. 21(9), pages 906-914, September.
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