IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v62y2015i1p125-161.html
   My bibliography  Save this article

Consumer Learning and Hybrid Vehicle Adoption

Author

Listed:
  • Garth Heutel

    ()

  • Erich Muehlegger

    ()

Abstract

We study the effect of differences in product quality on new technology diffusion. We propose a model in which heterogeneity in perceived product quality affects consumer adoption. If consumers experientially infer the quality of a technology, an increase in initial exposure to a low-quality product may inhibit subsequent diffusion. Incentives intended to speed up adoption may in fact have the opposite effect, if they propagate low-quality signals. We examine the predictions of the model using sales data for 11 hybrid-vehicle models between 2000 and 2006. Consistent with press reports that the first-generation Insight was perceived to be of lower quality than the first-generation Prius, we find that, conditional on overall hybrid vehicle adoption in the first 2 years, locations with a relatively high Prius market share experienced faster subsequent adoption than states with a relatively high Insight market share. We estimate the elasticity of new hybrid sales with respect to the Prius penetration rate is 0.30–0.58, while the elasticity with respect to the Insight penetration rate is $$-$$ - 0.14 to $$-$$ - 0.44. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Garth Heutel & Erich Muehlegger, 2015. "Consumer Learning and Hybrid Vehicle Adoption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 125-161, September.
  • Handle: RePEc:kap:enreec:v:62:y:2015:i:1:p:125-161
    DOI: 10.1007/s10640-014-9819-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10640-014-9819-3
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Francois Lescaroux & Olivier Rech, 2008. "The Impact of Automobile Diffusion on the Income Elasticity of Motor Fuel Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 41-60.
    2. de Haan, Peter & Mueller, Michel G. & Peters, Anja, 2006. "Does the hybrid Toyota Prius lead to rebound effects? Analysis of size and number of cars previously owned by Swiss Prius buyers," Ecological Economics, Elsevier, vol. 58(3), pages 592-605, June.
    3. Greenman, J. V., 1996. "The car park: Diffusion models revisited," Energy Economics, Elsevier, vol. 18(1-2), pages 107-128, April.
    4. Yaniv Dover & Jacob Goldenberg & Daniel Shapira, 2012. "Network Traces on Penetration: Uncovering Degree Distribution from Adoption Data," Marketing Science, INFORMS, vol. 31(4), pages 689-712, July.
    5. Stoneman, Paul & Kwon, Myung-Joong, 1994. "The Diffusion of Multiple Process Technologies," Economic Journal, Royal Economic Society, vol. 104(423), pages 420-431, March.
    6. Karen A. Kopecky & Richard M. H. Suen, 2010. "A Quantitative Analysis Of Suburbanization And The Diffusion Of The Automobile," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1003-1037, November.
    7. Michael Kremer & Edward Miguel, 2007. "The Illusion of Sustainability," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1007-1065.
    8. Jay Pil Choi, 1997. "Herd Behavior, the 'Penguin Effect,' and the Suppression of Informational Diffusion: An Analysis of Informational Externalities and Payoff Interdependency," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 407-425, Autumn.
    9. Paul Heidhues & Nicolas Melissas, 2006. "Equilibria in a dynamic global game: the role of cohort effects," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(3), pages 531-557, August.
    10. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    11. Kahn, Matthew E., 2007. "Do greens drive Hummers or hybrids? Environmental ideology as a determinant of consumer choice," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 129-145, September.
    12. Chandra, Ambarish & Gulati, Sumeet & Kandlikar, Milind, 2010. "Green drivers or free riders? An analysis of tax rebates for hybrid vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 78-93, September.
    13. Kenneth B. Medlock & Ronald Soligo, 2002. "Car Ownership and Economic Development with Forecasts to the Year 2015," Journal of Transport Economics and Policy, University of Bath, vol. 36(2), pages 163-188, May.
    14. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 317-343, October.
    15. Iimi, Atsushi, 2005. "Estimating demand for cellular phone services in Japan," Telecommunications Policy, Elsevier, vol. 29(1), pages 3-23, February.
    16. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Institute of Transportation Studies, Working Paper Series qt02n9j6cv, Institute of Transportation Studies, UC Davis.
    17. Robert W. Fri, 2003. "The Role of Knowledge: Technological Innovation in the Energy System," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 51-74.
    18. Nancy L. Rose & Paul L. Joskow, 1990. "The Diffusion of New Technologies: Evidence from the Electric Utility Industry," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 354-373, Autumn.
    19. Jensen, Richard, 1983. "Innovation adoption and diffusion when there are competing innovations," Journal of Economic Theory, Elsevier, vol. 29(1), pages 161-171, February.
    20. McFarland, James R. & Herzog, Howard J., 2006. "Incorporating carbon capture and storage technologies in integrated assessment models," Energy Economics, Elsevier, vol. 28(5-6), pages 632-652, November.
    21. H. Peyton Young, 2009. "Innovation Diffusion in Heterogeneous Populations: Contagion, Social Influence, and Social Learning," American Economic Review, American Economic Association, vol. 99(5), pages 1899-1924, December.
    22. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Resource and Energy Economics, Elsevier, vol. 31(3), pages 221-238, August.
    23. Geroski, P. A., 2000. "Models of technology diffusion," Research Policy, Elsevier, vol. 29(4-5), pages 603-625, April.
    24. Kloess, Maximilian & Müller, Andreas, 2011. "Simulating the impact of policy, energy prices and technological progress on the passenger car fleet in Austria--A model based analysis 2010-2050," Energy Policy, Elsevier, vol. 39(9), pages 5045-5062, September.
    25. Dieter Helm, 2010. "Government failure, rent-seeking, and capture: the design of climate change policy," Oxford Review of Economic Policy, Oxford University Press, vol. 26(2), pages 182-196, Summer.
    26. Arie Beresteanu & Shanjun Li, 2011. "Gasoline Prices, Government Support, And The Demand For Hybrid Vehicles In The United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 161-182, February.
    27. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
    28. Colombo, Massimo G & Mosconi, Rocco, 1995. "Complementarity and Cumulative Learning Effects in the Early Diffusion of Multiple Technologies," Journal of Industrial Economics, Wiley Blackwell, vol. 43(1), pages 13-48, March.
    29. Bryan Bollinger & Kenneth Gillingham, 2012. "Peer Effects in the Diffusion of Solar Photovoltaic Panels," Marketing Science, INFORMS, vol. 31(6), pages 900-912, November.
    30. James M. Sallee, 2011. "The Surprising Incidence of Tax Credits for the Toyota Prius," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 189-219, May.
    31. Paul Stoneman & Otto Toivanen, 1997. "The Diffusion Of Multiple Technologies: An Empirical Study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(1), pages 1-17.
    32. Mau, Paulus & Eyzaguirre, Jimena & Jaccard, Mark & Collins-Dodd, Colleen & Tiedemann, Kenneth, 2008. "The 'neighbor effect': Simulating dynamics in consumer preferences for new vehicle technologies," Ecological Economics, Elsevier, vol. 68(1-2), pages 504-516, December.
    33. Kahn Matthew E & Vaughn Ryan K., 2009. "Green Market Geography: The Spatial Clustering of Hybrid Vehicles and LEED Registered Buildings," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(2), pages 1-24, March.
    34. Andonova, Veneta, 2006. "Mobile phones, the Internet and the institutional environment," Telecommunications Policy, Elsevier, vol. 30(1), pages 29-45, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    2. Dastrup, Samuel R. & Graff Zivin, Joshua & Costa, Dora L. & Kahn, Matthew E., 2012. "Understanding the Solar Home price premium: Electricity generation and “Green” social status," European Economic Review, Elsevier, vol. 56(5), pages 961-973.
    3. repec:gam:jeners:v:10:y:2017:i:11:p:1775-:d:117489 is not listed on IDEAS
    4. repec:eee:jeeman:v:84:y:2017:i:c:p:18-43 is not listed on IDEAS
    5. Delgado, Michael S. & Harriger, Jessica L. & Khanna, Neha, 2015. "The value of environmental status signaling," Ecological Economics, Elsevier, vol. 111(C), pages 1-11.
    6. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins & Robert C. Stowe, 2015. "An Assessment of the Energy-Efficiency Gap and Its Implications for Climate Change Policy," Working Papers 2015.28, Fondazione Eni Enrico Mattei.
    7. Sexton, Steven E. & Sexton, Alison L., 2014. "Conspicuous conservation: The Prius halo and willingness to pay for environmental bona fides," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 303-317.
    8. Daziano, Ricardo A. & Chiew, Esther, 2012. "Electric vehicles rising from the dead: Data needs for forecasting consumer response toward sustainable energy sources in personal transportation," Energy Policy, Elsevier, vol. 51(C), pages 876-894.

    More about this item

    Keywords

    Hybrid vehicles; Consumer behavior; Learning; Government incentives; Energy efficiency; O33; Q55; D83;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:62:y:2015:i:1:p:125-161. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.