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Quantifying the Benefits of Multifuel Cars: An Application of Random-Coefficients Logit Model

Author

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  • Cláudio Ribeiro de Lucinda

Abstract

This paper tries to measure the welfare gains from technological innovation, focusing on the most important technological breakthough of Brazilian auto industry during the last decade: the so-called \ ex-fuel" cars, able to operate using various fuel types. In order to do that, initially a review of the literature was carried out, both on the evolution of the technolgy as well as on the valuation of new goods. On the empirical part, an econometric estimation of a demand relation using Random Coecient Logit model, on the other hand led to a welfare estimate, for the perfect competition assumption, of about 1.2 thousand Reais per family, in the same period, using the perfect competition assumption and just one thousand assuming differentiated products competition.

Suggested Citation

  • Cláudio Ribeiro de Lucinda, 2010. "Quantifying the Benefits of Multifuel Cars: An Application of Random-Coefficients Logit Model," Working Papers 01-2010, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
  • Handle: RePEc:fea:wpaper:01-2010
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    File URL: ftp://cpq.fearp.usp.br:2300/textos_discussao/eco/TD-E01-2010.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Amil Petrin, 2001. "Quantifying the Benefits of New Products: The Case of the Minivan," NBER Working Papers 8227, National Bureau of Economic Research, Inc.
    2. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters,in: The Economics of New Goods, pages 207-248 National Bureau of Economic Research, Inc.
    3. Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    C51; D12; D43; D60; L13; O47;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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