Towards a clean vehicle fleet: from households’ valuation of fuel efficiency to policy implications
This paper investigates household behaviour with regard to vehicle fuel efficiency. We propose to approach the Willingness to Pay (WTP) for better fuel efficiency through the Hicksian compensating variation in income. Specifically, we distinguish the Willingness to Pay or to Accept (WTA) buying a more fuel-efficient car from the theoretical WTP for a reduction in fuel consumption without changing one’s car. Then by assuming that the household has to replace its car, we estimate a WTP for the cleanest car. We also analyse what effect a fuel tax and/or a feebate scheme (e.g. a bonus-malus scheme) have on the WTP for the cleanest car and on the driven mileage. We find that the WTP for the cleanest car decreases following the implementation of a fuel tax. To the contrary, a feebate system leads to an increase in this WTP. But we also find that reducing the market price of the new vehicle (i.e. through a bonus) is not worthwhile in the light of the rebound effect. However, a fuel tax – as soon as it exceeds a certain level – is able to nullify the rebound effect.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mandell, Svante, 2009.
"Policies towards a more efficient car fleet,"
Elsevier, vol. 37(12), pages 5184-5191, December.
- Brännlund, Runar & Ghalwash, Tarek & Nordström, Jonas, 2004.
"Increased Energy Efficiency and the Rebound Effect: Effects on consumption and emissions,"
Umeå Economic Studies
642, Umeå University, Department of Economics.
- Brannlund, Runar & Ghalwash, Tarek & Nordstrom, Jonas, 2007. "Increased energy efficiency and the rebound effect: Effects on consumption and emissions," Energy Economics, Elsevier, vol. 29(1), pages 1-17, January.
- Alessandro Gavazza & Alessandro Lizzeri & Nikita Roketskiy, 2014.
"A Quantitative Analysis of the Used-Car Market,"
American Economic Review,
American Economic Association, vol. 104(11), pages 3668-3700, November.
- Gavazza, Alessandro & Lizzeri, Alessandro & Rokestkiy, Nikita, 2012. "A quantitative analysis of the used-car market," MPRA Paper 38414, University Library of Munich, Germany.
- Alessandro Gavazza & Alessandro Lizzeri & Nikita Roketskiy, 2014. "A quantitative analysis of the used-car market," LSE Research Online Documents on Economics 55720, London School of Economics and Political Science, LSE Library.
- Nikita Roketskiy & Alessandro Lizzeri & Alessandro Gavazza, 2012. "A Quantitative Analysis of the Used Car Market," 2012 Meeting Papers 173, Society for Economic Dynamics.
- de Haan, Peter & Mueller, Michel G. & Scholz, Roland W., 2009. "How much do incentives affect car purchase? Agent-based microsimulation of consumer choice of new cars--Part II: Forecasting effects of feebates based on energy-efficiency," Energy Policy, Elsevier, vol. 37(3), pages 1083-1094, March.
- Schafer, Andreas & Victor, David G., 2000. "The future mobility of the world population," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(3), pages 171-205, April.
- Wang, Ke & Wang, Can & Chen, Jining, 2009. "Analysis of the economic impact of different Chinese climate policy options based on a CGE model incorporating endogenous technological change," Energy Policy, Elsevier, vol. 37(8), pages 2930-2940, August.
- Schipper, Lee, 2011. "Automobile use, fuel economy and CO2 emissions in industrialized countries: Encouraging trends through 2008?," Transport Policy, Elsevier, vol. 18(2), pages 358-372, March.
- West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
- Clerides, Sofronis & Zachariadis, Theodoros, 2008. "The effect of standards and fuel prices on automobile fuel economy: An international analysis," Energy Economics, Elsevier, vol. 30(5), pages 2657-2672, September.
- Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
- Muthukrishnan, Subhashini, 2010. "Vehicle ownership and usage charges," Transport Policy, Elsevier, vol. 17(6), pages 398-408, November.
- Kenneth Train, 1985. "Qualitative Choice Analysis: Theory, Econometrics, and an Application to Automobile Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200554.
- Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
- de Palma, Andre & Kilani, Moez, 2008. "Regulation in the automobile industry," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 150-167, January.
When requesting a correction, please mention this item's handle: RePEc:cec:wpaper:1406. 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: (Climate Economics Chair)
If references are entirely missing, you can add them using this form.