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Fuel Prices and New Vehicle Fuel Economy in Europe

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  • Thomas Klier
  • Joshua Linn

Abstract

This paper evaluates the effect of fuel prices on new vehicle fuel economy in the eight largest European markets. The analysis spans the years 2002–2007 and uses detailed vehicle registration and specification data to control for policies, consumer preferences, and other potentially confounding factors. Fuel prices have a statistically significant effect on new vehicle fuel economy in Europe, but this estimated effect is much smaller than that for the United States. Within Europe, fuel economy responds more in the United Kingdom and France than in the other large markets. Overall, substantial changes in fuel prices would have relatively small effects on the average fuel economy of new vehicles sold in Europe. We find no evidence that diesel fuel prices have a large effect on the market share of diesel vehicles.

Suggested Citation

  • Thomas Klier & Joshua Linn, 2011. "Fuel Prices and New Vehicle Fuel Economy in Europe," Working Papers 1117, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  • Handle: RePEc:mee:wpaper:1117
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    References listed on IDEAS

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    1. repec:kap:transp:v:45:y:2018:i:2:d:10.1007_s11116-016-9741-3 is not listed on IDEAS
    2. Klier, Thomas & Linn, Joshua, 2012. "Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden," Discussion Papers dp-12-34, Resources For the Future.
    3. Pauline Givord & Céline Grislain-Letrémy & Helene Naegele, 2014. "How Does Fuel Taxation Impact New Car Purchases?: An Evaluation Using French Consumer-Level Data," Discussion Papers of DIW Berlin 1428, DIW Berlin, German Institute for Economic Research.

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