Full Citation

Title: Does Energy Efficiency Affect Demand: An Empirical Study on the Energy Paradox Within Automobile Industry

Citation Type: Dissertation/Thesis

Publication Year: 2018

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: This paper studies whether consumer undervaluation on energy factor can explain “the energy paradox” within automotive market, where slow adoption of vehicles with better fuel economy has been observed. We obtained survey data from California Energy Commission, used random coefficient logit model developed by Berry, Levinsohn, and Pakes (1995) to perform market demand estimation, and created an empirical willingness to pay (WTP) distribution for an additional miles per gallon (mpg) to investigate consumer valuation. Our result shows that only about 30% of the distribution has WTP more than $600 (calculated as a reasonable cutoff for one more mpg). With the majority unwilling to pay for an extra mpg, this suggests that consumers undervalue fuel economy, illustrating the paradox.

Url: https://scaotravis.github.io/downloads/cao_fuel_economy.pdf

User Submitted?: No

Authors: Cao, Shengyang

Institution: University of Wisconsin-Madison

Department: Economics

Advisor: Matthew Wiswall

Degree: Honors

Publisher Location: Madison, Wisconsin

Pages:

Data Collections: IPUMS CPS

Topics: Natural Resource Management, Other

Countries: