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Automobile Fuel Economy: What is it Worth?

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  • Nair, Santosh
  • Espey, Molly

Abstract

The marginal value of increased automobile fuel economy is estimated using a hedonic model of 2001 model year automobiles sold in the United States. This value is then compared to the average expected lifetime fuel savings attributable to increased fuel economy. Results indicate that automobile buyers fully internalize fuel cost savings attributable to improved fuel economy at low discount rates, and may partially internalize other perceived benefits of improved fuel economy such as reduction in global warming or fossil fuel dependence.

Suggested Citation

  • Nair, Santosh & Espey, Molly, 2004. "Automobile Fuel Economy: What is it Worth?," 2004 Annual meeting, August 1-4, Denver, CO 20102, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea04:20102
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    References listed on IDEAS

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    1. Arguea, Nestor M. & Hsiao, Cheng, 1993. "Econometric issues of estimating hedonic price functions : With an application to the U.S. market for automobiles," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 243-267, March.
    2. Makoto Ohta & Zvi Griliches, 1976. "Automobile Prices Revisited: Extensions of the Hedonic Hypothesis," NBER Chapters,in: Household Production and Consumption, pages 325-398 National Bureau of Economic Research, Inc.
    3. Mertens, Yves & Ginsburgh, Victor, 1985. "Product Differentiation and Price Discrimination in the European Community: The Case of Automobiles," Journal of Industrial Economics, Wiley Blackwell, vol. 34(2), pages 151-166, December.
    4. Cowling, Keith & Cubbin, John, 1971. "Price, Quality and Advertising Competition: An Econometric Investigation of the United Kingdom Car Market," Economica, London School of Economics and Political Science, vol. 38(152), pages 378-394, November.
    5. Dreyfus, Mark K & Viscusi, W Kip, 1995. "Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 79-105, April.
    6. Victor Ginsburgh & Yves Mertens, 1985. "Product differentiation and discrimination in the European Community: the case of automobiles," ULB Institutional Repository 2013/1755, ULB -- Universite Libre de Bruxelles.
    7. Atkinson, Scott E & Halvorsen, Robert, 1984. "A New Hedonic Technique for Estimating Attribute Demand: An Application to the Demand for Automobile Fuel Efficiency," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 417-426, August.
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    Keywords

    Resource /Energy Economics and Policy;

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