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Energy pricing reform and energy efficiency in China: Evidence from the automobile market

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  • Sun, Qi
  • Xu, Lin
  • Yin, Hua

Abstract

Promoting energy efficiency by undertaking a market-oriented reform of the energy-pricing mechanism is one of the top priorities of China's ongoing reform effort. In this study, we examine the impacts of China's gasoline-pricing reform implemented in January 2009 on the fuel economy of the country's new automotive fleet. In particular, we distinguish the effects of two common elements of China's energy-pricing reform packages: the effects of the energy tax increase (i.e., the gasoline tax increase) and the effects of the energy-pricing mechanism reform (i.e., the adoption of a market-oriented pricing scheme for gasoline). By exploiting a rich dataset of monthly new passenger vehicle sales at the vehicle-model level in China between 2008 and 2013, we are able to control for potential correlations between unobserved product and consumer characteristics and products’ fuel efficiency. Our empirical results infer that fuel costs have a significant influence on new vehicle sales in China, while the presented policy simulations suggest that the gasoline-pricing reform in China has led to an approximately 6.25 percent increase in new vehicle fuel economy. Moreover, the two major elements of the reform, the gasoline tax increase and expedited adjustment cycles for gasoline prices, make similar contributions to the increase in the new vehicle fleet's fuel economy, with the former contributing 3.43 percent and the latter, 2.82 percent.

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  • Sun, Qi & Xu, Lin & Yin, Hua, 2016. "Energy pricing reform and energy efficiency in China: Evidence from the automobile market," Resource and Energy Economics, Elsevier, vol. 44(C), pages 39-51.
    • Handle: RePEc:eee:resene:v:44:y:2016:i:c:p:39-51
    DOI: 10.1016/j.reseneeco.2016.02.001
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    4. Wang, Kai-Hua & Su, Chi-Wei & Xiao, Yidong & Liu, Lu, 2022. "Is the oil price a barometer of China's automobile market? From a wavelet-based quantile-on-quantile regression perspective," Energy, Elsevier, vol. 240(C).
    5. Jain, Prachi & Maitra, Debasish & Kang, Sang Hoon, 2023. "Oil price and the automobile industry: Dynamic connectedness and portfolio implications with downside risk," Energy Economics, Elsevier, vol. 119(C).
    6. Zhang, Yanfang & Nie, Rui & Shi, Xunpeng & Qian, Xiangyan & Wang, Ke, 2019. "Can energy-price regulations smooth price fluctuations? Evidence from China’s coal sector," Energy Policy, Elsevier, vol. 128(C), pages 125-135.
    7. Zha, Jianping & Tan, Ting & Fan, Rong & Xu, Han & Ma, Siqi, 2020. "How to reduce energy intensity to achieve sustainable development of China's transport sector? A cross-regional comparison analysis," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    8. Ju, Keyi & Su, Bin & Zhou, Dequn & Wu, Junmin, 2017. "Does energy-price regulation benefit China's economy and environment? Evidence from energy-price distortions," Energy Policy, Elsevier, vol. 105(C), pages 108-119.
    9. Ru Sha & Tao Ge & Jinye Li, 2022. "How Energy Price Distortions Affect China’s Economic Growth and Carbon Emissions," Sustainability, MDPI, vol. 14(12), pages 1-27, June.
    10. Chu Wei & Ying Xu & Chuan-Zhong Li, 2022. "Recent advances in China’s sustainable transition studies," Letters in Spatial and Resource Sciences, Springer, vol. 15(3), pages 279-286, December.
    11. Huiru Zhao & Yuwei Wang & Sen Guo & Mingrui Zhao & Chao Zhang, 2016. "Application of a Gradient Descent Continuous Actor-Critic Algorithm for Double-Side Day-Ahead Electricity Market Modeling," Energies, MDPI, vol. 9(9), pages 1-20, September.
    12. Li, Hui & Wu, Zixuan & Yuan, Xing & Yang, Yixuan & He, Xiaoqiang & Duan, Huiming, 2022. "The research on modeling and application of dynamic grey forecasting model based on energy price-energy consumption-economic growth," Energy, Elsevier, vol. 257(C).
    13. Park, Jiyong & Woo, JongRoul, 2023. "Analyzing consumers' willingness to purchase energy-efficient appliances in response to energy price changes: Case study of South Korea," Energy Economics, Elsevier, vol. 127(PA).

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    More about this item

    Keywords

    Energy pricing reform in China; Energy efficiency; Gasoline price; Automobile demand; Fuel economy;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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