analysis of policies to reduce oil consumption and greenhouse gas emissions from the us transportation sector abstract even as the us debates an economy wide co 2 cap and trade policy the transportation sector remains a significant oil security and climate change concern transportation alone consumes the majority of the us s imported oil and produces a third of total us greenhouse gas ghg emissions this study examines different sector specific policy scenarios for reducing ghg emissions and oil consumption in the us transportation sector under economy wide co 2 prices the 2009 version of the energy information administration s eia national energy modeling system nems a general equilibrium model of us energy markets enables quantitative estimates of the impact of economy wide co 2 prices and various transportation specific policy options we analyze fuel taxes continued increases in fuel economy standards and purchase tax credits for new vehicle purchases as well as the impacts of combining these policies all policy scenarios modeled fail to meet the obama administration s goal of reducing ghg emissions 14 below 2005 levels by 2020 purchase tax credits are expensive and ineffective at reducing emissions while the largest reductions in ghg emissions result from increasing the cost of driving thereby damping growth in vehicle miles traveled

reduction potentials of energy demand and ghg emissions in china s road transport sector abstract rapid growth of road vehicles private vehicles in particular has resulted in continuing growth in china s oil demand and imports which has been widely accepted as a major factor effecting future oil availability and prices and a major contributor to china s ghg emission increase this paper is intended to analyze the future trends of energy demand and ghg emissions in china s road transport sector and to assess the effectiveness of possible reduction measures a detailed model has been developed to derive a reliable historical trend of energy demand and ghg emissions in china s road transport sector between 2000 and 2005 and to project future trends two scenarios have been designed to describe the future strategies relating to the development of china s road transport sector the business as usual scenario is used as a baseline reference scenario in which the government is assumed to do nothing to influence the long term trends of road transport energy demand the best case scenario is considered to be the most optimized case where a series of available reduction measures such as private vehicle control fuel economy regulation promoting diesel and gas vehicles fuel tax and biofuel promotion are assumed to be implemented energy demand and ghg emissions in china s road transport sector up to 2030 are estimated in these two scenarios the total reduction potentials in the best case scenario and the relative reduction potentials of each measure have been estimated

structural instability and the production smoothing model of inventories the production smoothing model of inventories implies that inventories labor inputs sales and factor input prices are cointegrated if sales and factor prices are i 1 with one cointegrating vector for each state variable held these propositions are tested in six nondurable goods industries all industries provide evidence of cointegration fewer quasi fixed factors are found than previous research often assumed estimates of cointegrating vectors provide implausible parameter estimates rank stability tests with fixed or seqentially chosen breakpoints indicate that the cointegrating matrix has unstable rank parameter estimates of cointegrating vectors do not provide much support for the production smoothing model of inventories

survey evidence on the willingness of u s consumers to pay for automotive fuel economy abstract prospect theory holds that human beings faced with a risky bet will tend to value potential losses about twice as much as potential gains previous research has demonstrated that prospect theory could be sufficient to explain an energy paradox in the market for automotive fuel economy this paper analyzes data from questions added to four commercial multi client surveys of 1000 u s households each in 2004 2011 2012 and 2013 households were asked about willingness to pay for future fuel savings as well as the annual fuel savings necessary to justify a given upfront payment payback periods inferred from household responses are generally consistent over time and across different formulations of questions mean calculated payback periods are about 3 years but there is substantial dispersion among individual responses the calculated payback periods do not appear to be correlated with the attributes of respondents respondents were able to quantitatively describe their uncertainty about both vehicle fuel economy and future fuel prices simulation of loss averse behavior based on respondents stated uncertainty illustrates how loss aversion could lead consumers to substantially undervalue future fuel savings relative to their expected value

inventory behavior with permanent sales shocks abstract empirically adf tests fail to reject the null hypothesis that sales are i 1 we build a model of inventory behavior that incorporates permanent sales shocks analytically the model with i 1 sales implies that the variance ratio of log production to log sales is one in the long run regardless of the strength of production smoothing stockout avoidance or cost shocks but that at business cycle horizons the conditional variance ratio conditional on past production and sales is greater than one we explain analytically using our model and intuitively four traditional inventory puzzles and three puzzles about inventories and monetary policy

is there an energy efficiency gap many analysts have argued that energy efficiency investments offer an enormous win win opportunity to both reduce negative externalities and save money this overview paper presents a simple model of investment in energy using capital stock with two types of market failures first uninternalized externalities from energy consumption and second forces such as imperfect information that cause consumers and firms not to exploit privately profitable energy efficiency investments the model clarifies that only if the second type of market failure cannot be addressed directly through mechanisms such as information provision energy efficiency subsidies and standards may be merited this chapter therefore reviews the empirical work on the magnitude of profitable unexploited energy efficiency investments a literature which frequently does not meet modern standards for credibly estimating the net present value of energy cost savings and often leaves other benefits and costs unmeasured these problems notwithstanding recent empirical work in a variety of contexts implies that on average the magnitude of profitable unexploited investment opportunities is much smaller than engineering accounting studies suggest finally there is tremendous opportunity and need for policy relevant research that utilizes randomized controlled trials and quasi experimental techniques to estimate the returns to energy efficiency investments and the welfare effects of energy efficiency programs

the impact of government policy on preference for nevs the evidence from china to reduce gasoline consumption and emissions the chinese government has introduced a series of preferential policies to encourage the purchase of new energy vehicles nevs however enthusiasm for the private purchase of nevs appears to be very low this timely paper addresses the need for an empirical study to explore this phenomenon by identifying purchase motivations of potential nev consumers and examining the impact of government policies introduced to promote nevs in china a questionnaire survey was carried out the acceptance of nevs is measured in three different logistic models the willingness of consumers to purchase nevs the purchasing time and the acceptable price the results showed that financial benefits performance attributes environmental awareness and psychological needs are the four most important factors influencing consumers acceptance of nevs among these performance attributes rather than financial benefits are the most important indicator the moderating effect of government policies to relations between purchasing intention time and price is not strong as respected while the policy implications are clear that the public awareness of government policy functions as a moderator in the process of acceptance these findings could give some hints to the government to make better nev industry policy

do green tech policies need to pass the consumer test the case of ethanol fuel abstract this paper investigates a question sometimes overlooked by policymakers and regulators namely the need of a robust value proposition for green technologies to successfully enter the market in particular results from consumer choice models are used to develop measures of consumer acceptance of ethanol blends and flex fuel vehicles is studied a fuel vehicle system that has received attention in a variety of federal and state policies the analysis suggests that under projected fuel prices and given the characteristics of the competing vehicle fuel systems consumers are unlikely to substitute ethanol blends for gasoline the analysis also highlights the need for further research in this area

the long run implications of the production smoothing model of inventories an empirical test summary this paper provides an empirical test of the long run implications of the production smoothing model of inventories the dominant framework for inventory investment research in the past intertemporal models of a firm holding inventories of finished goods predict a long run relationship between inventories shipments factor input prices and the real interest rate which is tested here using cointegration test procedures these tests provide little support for the predictions of the production smoothing model in most of the data sets used test statistics indicate that inventories shipments factor input prices the nominal interest rate and the inflation rate maintain a long run equilibrium relationship but parameter estimates of cointegrating vectors are often implausible typically rejecting hypotheses implied by structural models of the production smoothing motive for holding inventories

impacts of fuel economy improvements on the distribution of income in the u s abstract we estimate the impacts of passenger car and light truck fuel economy improvements in the u s since 1975 on the real monetary incomes of u s households by income quintile over the period 1980 2014 we limit our analysis to the direct monetary impacts fuel savings minus increased vehicle costs and do not attempt a full welfare analysis we include all vehicle purchases new and used household fuel expenditures come from the u s consumer expenditures surveys ces costs of increased new passenger car and light truck fuel economy were obtained from four national research council nrc studies plus a literature review of earlier estimates the nrc cost functions provide a unique time series of technology supply functions constructed by balanced expert panels and comprised of specific technologies proven to increase fuel economy effects of fuel economy improvements on used vehicle prices are based on an analysis of the ces data retrospective analysis indicates that all income quintiles received net savings and that the effect on the distribution of income was progressive a prospective analysis of future fuel economy improvements produced similar results sensitivity analysis indicates that these findings are relatively robust

offsetting behavior effects of the corporate average fuel economy standards john m yun 1 introduction consumers value many attributes of an automobile the problem for regulators is that many features are highly interrelated such as safety and fuel economy improvements both features are highly correlated with vehicle weight greater weight increases the level of safety in terms of crashworthiness but decreases the fuel economy therefore regulatory attempts to improve fuel economy such as the corporate average fuel economy cafe standards 1 are likely to alter average vehicle weight which will alter the safety of a vehicle crandall and graham 1989 find the reduction in weight attributable to cafe results in a 14 28 increase in occupant fatality risk this article seeks to determine whether drivers are changing their behavior to mitigate the detrimental safety effects of cafe which is essentially another application of peltzman s 1975 offsetting behavior hypothesis cafe through a reduction in passenger car weight will increase the ex ante cost of risky driving 2 relative to its expected benefit the reason is that once an accident occurs the probability of serious injury or death has increased the offsetting behavior hypothesis is that consumers aware of the increased vulnerability will exercise greater due care and reduce the amount of risky driving on the road as a result of cafe however cafe has not just affected the average passenger car weight godek 1997 and yun 1999 indicate that cafe has positively affected the relative sales of light trucks 3 to passenger cars if we assume that light trucks are basically heavy cars with greater visibility the same arguments made for offsetting behavior on the part of passenger car drivers can be applied here 4 the main difference is that truck drivers will be more aggressive and risky because trucks are heavier which lowers the cost of risky driving thus if cafe induces more trucks to be on the road according to the offsetting behavior hypothesis cafe will increase the amount of aggressive truck driving while simultaneously decreasing the amount of aggressive car driving although the article will focus on the offsetting behavior from changes in passenger car weight it is just as relevant for changes in relative truck miles driven section ii reviews the recent research linking automobile weight changes with cafe and recent empirical studies that apply offsetting behavior to automobile regulations 5 section iii details the methodology used to test the offsetting behavior hypothesis section iv contains a discussion of the data the results are reported in section v and section vi concludes the article ii background the cafe standards were initially set at 18 0 mpg for passenger cars and between 15 8 to 17 2 mpg for various light trucks these standards have steadily increased to the current levels of 27 5 mpg for passenger cars and 20 7 mpg for light trucks 6 the key impact of cafe on consumer safety is a reduction in the average passenger car weight figure 1 illustrates the fall in weight since cafe s passage in 1975 crandall and graham 1989 attribute 14 of the fall in weight to cafe 7 using single car accident data they estimate the elasticity of highway occupant fatality rates with respect to average car weight is between 1 22 and 2 30 which implies a 17 32 2 increase in the fatality rate due to cafe using the upper and lower bounds crandall and graham 1989 estimate that cafe is responsible for 2 200 3 900 more deaths over the life span of the cars from a given model year 8 however there is no attempt to explicitly measure possible offsetting behavior effects not all studies find a positive relationship between weight and safety the general accounting office gao 1991 acknowledges a theoretical link between automobile size and safety however they find no direct empirical link between the two

a note on the econometric use of constant dollar inventory series abstract one dollar of finished goods inventories does not represent the same amount of physical goods as one dollar of sales when department of commerce constant dollar series are used this can cause seriously biased regression estimates

car buyers and fuel economy abstract this research is designed to help researchers and policy makers ground their work in the reality of how us consumers are thinking and behaving with respect to automotive fuel economy our data are from semi structured interviews with 57 households across nine lifestyle sectors we found no household that analyzed their fuel costs in a systematic way in their automobile or gasoline purchases almost none of these households track gasoline costs over time or consider them explicitly in household budgets these households may know the cost of their last tank of gasoline and the unit price of gasoline on that day but this accurate information is rapidly forgotten and replaced by typical information one effect of this lack of knowledge and information is that when consumers buy a vehicle they do not have the basic building blocks of knowledge assumed by the model of economically rational decision making and they make large errors estimating gasoline costs and savings over time moreover we find that consumer value for fuel economy is not only about private cost savings fuel economy can be a symbolic value as well for example among drivers who view resource conservation or thrift as important values to communicate consumers also assign non monetary meaning to fuel prices for example seeing rising prices as evidence of conspiracy this research suggests that consumer responses to fuel economy technology and changes in fuel prices are more complex than economic assumptions suggest the us department of energy and the energy foundation supported this research the authors are solely responsible for the content and conclusions presented

perception and reality public knowledge of plug in electric vehicles in 21 u s cities this paper examines the extent of consumer knowledge about plug in electric vehicles pevs and the current policies in place to encourage their purchase and use data are collected via a survey administered to a sample of 2302 adult drivers in 21 of the largest cities in the united states almost two thirds of the respondents provided incorrect answers to basic factual questions about pevs and of those approximately 75 underestimated their private value or advantages the vast majority 94 5 of respondents were not aware of the current state and local incentives in place in their locale to encourage pev purchase and use based on a review of consumer theory multivariate models are developed and used to assess the factors associated with consumer interest in the two major types of pev technologies battery electric vehicles bev and plug in hybrid electric vehicles phev results show demographic and attitudinal characteristics having the largest influence on interest in either type of pev misperceptions about purchase price and expected fuel and maintenance savings are likewise significant although their impacts differ between bevs and phevs better informing consumers about already available public incentives and advantageous aspects of existing pev technologies offer promising steps toward their mass commercialization

the interrelationship between price and output decisions and investment decisions microfoundations and aggregate implications abstract this paper develops a model of firm behavior in which both price and output decisions and investment decisions are made the model permits an analysis of the dynamics of inventory and capital accumulation on price and output behavior there are two main results 1 short run price and output levels will differ from long run levels as desired stocks of inventory and capital diverge from actual levels 2 the size of the elasticities of price and output to changes in demand and cost variables depends on the speed with which gaps between desired and actual stocks are closed through investment

investigation of production sales and inventory relationships using multicointegration and non symmetric error correction models the accumulated sum of a stationary series is called integrated if a linear combination of some of the integrated series is stationary it is said to be cointegrated this paper presents empirical results on inventories to consider the possibility of a deeper form of cointegration called multicointegration which is introduced in granger and lee 1989 a vector integrated series is multicointegrated if the accumulated sum of its stationary cointegrated linear combination is again cointegrated with itself inventory which is the accumulated sum of production minus sales is probably cointegrated with production and sales the empirical results generally support the presence of multicointegration of production and sales in many u s industries and industrial aggregates the results also favour the non symmetric error correction model providing evidence that the strength of attraction is different on both sides of the attractor a modified s s rule for inventory control is investigated in the context of a non symmetric error correction model and the results generally do not support the s s rule sufficient evidence is found to conclude that multicointegration is a useful concept in the area of inventory determination

joint production quasi fixed factors of production and investment in finished goods inventories inventory investment has long been an important area of inquiry for empirical work in macroeconomics this is due in large measure to the fact that inventory investment is a major source of fluctuations in aggregate output empirical work on inventories however has been dominated by the use of simple univariate flexible accelerators 1 the major objective of this paper is to propose and test a multivariate flexible accelerator model for inventory investment the model is tested with data on finished goods inventories from the manufacturing sector of the u s economy there are two reasons for undertaking such a task first at a theoretical level a univariate flexible accelerator model asserts that investment in say finished goods inventories is proportional to the gap between the desired and actual stocks of finished goods such a model presumes that decisions by firms on finished goods inventories are made independently of decisions on other stocks but theory suggests that when firms make simultaneous decisions on a variety of stocks which includes not only finished goods but also goods in process inventories the size of the work force etc decisions on finished goods will interact with decisions on

modelling transport energy demand a socio technical approach despite an emerging consensus that societal energy consumption and related emissions are not only influenced by technical efficiency but also by lifestyles and socio cultural factors few attempts have been made to operationalise these insights in models of energy demand this paper addresses that gap by presenting a scenario exercise using an integrated suite of sectoral and whole systems models to explore potential energy pathways in the uk transport sector techno economic driven scenarios are contrasted with one in which social change is strongly influenced by concerns about energy use the environment and well being the what if lifestyle scenario reveals a future in which distance travelled by car is reduced by 74 by 2050 and final energy demand from transport is halved compared to the reference case despite the more rapid uptake of electric vehicles and the larger share of electricity in final energy demand it shows a future where electricity decarbonisation could be delayed the paper illustrates the key trade off between the more aggressive pursuit of purely technological fixes and demand reduction in the transport sector and concludes there are strong arguments for pursuing both demand and supply side solutions in the pursuit of emissions reduction and energy security

energy policy in transport and transport policy explanations for and indirect evidence of imperfections in the market for private passenger vehicle fuel economy suggest there is a reasonable case for combining fuel economy standards and fuel or carbon taxes to contribute to an energy policy that aims to reduce greenhouse gas emissions and improve energy security estimates of key elasticities including the rebound effect indicate that the positive and negative side effects of fuel economy measures on transport activities and external costs are limited however an energy policy for transport does not replace a transport policy that aims to manage the main transport externalities including congestion and local pollution conventional marginal cost estimates and standard cost benefit reasoning suggest that policies that address congestion and local pollution likely bring benefits at least as large as those from fuel economy measures but the large uncertainty on the possible effects of greenhouse gas emissions constitutes a strong challenge for standard cost benefit reasoning emerging results from methods to cope with this uncertainty suggest that policies to stimulate the widespread adoption of low carbon technologies in transport are justified

green consumption under misperceived prices an application to active transportation we propose a consumption model that captures the impact that perceived price ambiguities may have upon decision making in green markets in general and in active transportation markets in particular the basic intuition for the model is that a consumer who may be misperceiving the price of the green good the active transportation mode would be willing to pay a positive amount from her income in the current period to resolve the misperception going forward we posit that the basis for the price misperception in the active transportation context is misperception of the relative risks involved in taking that mode the compensating variation that aligns perceived and objective risk is derived we show how raising green consumption via price misperception correction can be superior to traditional economic policy instruments the results shed light on the more general family of situations in which agents may consistently misperceive aspects of the decision environment

the resurgence of inventory research what have we learned abstract recent empirical and theoretical research on business inventories is surveyed and critically evaluated while most inventory research has had macroeconomic motivations we focus on its microtheoretic basis and on potential conflicts between theory and evidence the paper asks two principal questions first how can inventories which are allegedly used by firms to stabilize production nonetheless be a destabilizing factor at the macroeconomic level second why if firms are following the production smoothing model is production more variable than sales in many industries we suggest that the so called s s model may help answer both questions

the mis specification of production costs in production smoothing models estimation results obtained with production smoothing models are often imprecise and sensitive to normalisation rules it is argued here that production costs in these models can be better specified in terms of production factor costs the resulting factor demand model with inventories leads to more efficient estimation results and normalisation rules become even redundant furthermore the smoothing role of inventories with respect to production factors is discussed c 1997 elsevier science s a

household adjustment to gasoline price change an analysis using 9 years of us survey data this paper examines the dynamics and composition of household adjustment to changes in the real price of gasoline using a panel of us households by decomposing the demand for gasoline into the demand for vehicle miles traveled and the demand for household composite miles per gallon we are able to add rich detail to the description of how households respond to gasoline price changes while obtaining total price elasticity estimates well within the range found in the literature we find that consumers initially respond to a price rise with a much larger decrease in consumption than would be indicated by the total elasticity in addition households respond to price changes by adjusting vehicle miles traveled more than composite miles per gallon in the year after a price change

a cultural model of private provision and the environment abstract this paper analyses an overlapping generations model of environmental externalities and capital accumulation where private contributions to environmental quality are motivated by a desire to socialize others into environmental attitudes in this framework the formation of environmental preferences is the result of a cultural transmission process depending on the extent of private contributions in the short run we show that three equilibria may arise a first one where all green agents contribute to the environment a second one where nobody contributes to the environment and a third interior one we show that the capital accumulation process and the change in preferences that occur in this economy lead the interior equilibrium to be selected in which some but not all green agents contribute to the environment the model thus provides an economic rationale for the gap between the number of people who care about the environment and the number who adopt pro environmental behaviours we also show that the fraction of contributors rises with capital so that we explain the negative relationship between this gap and country income last we show that this gap is particularly detrimental for welfare and analyse the impact of a number of public policies

the effectiveness of financial purchase incentives for battery electric vehicles a review of the evidence abstract plug in electric vehicles pevs are in an early stage of market entry nevertheless there are now more than 2 million pevs in use globally pevs result in lower energy consumption greenhouse gas emissions and urban air pollution compared to internal combustion engine vehicles icevs for these reasons policy makers are eager to see pevs purchased by consumers in larger numbers many policy makers have introduced financial purchase incentives to nurture the growth of pev markets these incentives range in value from around us 2500 to us 20 000 per vehicle there are several studies that either directly consider the effectiveness of purchase incentives or at least include analysis of these incentives as part of a larger study the results of these studies have not been assimilated in one place to gain an understanding of whether purchase incentives are effective in promoting pev sales this means that how effective these incentives are in increasing pev sales is not well understood this paper systematically reviews the literature with the aim of understanding purchase incentives effectivity in increasing pev sales in doing so this paper builds a deeper understanding of purchase incentives this in depth understanding allows recommendations to be made on how to design purchase incentives so that they are most effective in promoting pev market growth incentives should be applied when someone is buying a pev not afterwards incentives should promote bevs and phev with high electric ranges more than phevs with low electric ranges vat and purchase tax exemptions for pevs are most effective incentives should not be available on high end bevs education and awareness campaigns should promote incentives to consumers finally the premature removal of incentives could negatively affect pevs therefore incentives should be designed with longevity in mind

how much do incentives affect car purchase agent based microsimulation of consumer choice of new cars part i model structure simulation of bounded rationality and model validation this article presents an agent based microsimulation capable of forecasting the effects of policy levers that influence individual choices of new passenger cars the fundamental decision making units are households distinguished by sociodemographic characteristics and car ownership a two stage model of individual decision processes is employed in the first stage individual choice sets are constructed using simple non compensatory rules that are based on previously owned cars second decision makers evaluate alternatives in their individual choice set using a multi attributive weighting rule the attribute weights are based on a multinomial logit model for cross country policy analysis in european countries additionally prospect theory and the notion of mental accounting are used to model the perception of monetary values the microsimulation forecasts actual market observations with high accuracy both on the level of aggregate market characteristics as well as on a highly resolved level of distributions of market shares the presented approach is useful for the assessment of policies that influence individual purchase decisions of new passenger cars it allows accounting for a highly resolved car fleet and differentiated consumer segments as a result the complexity of incentive schemes can be represented and detailed structural changes can be investigated

market driven automotive industry compliance with fuel economy and greenhouse gas standards analysis based on consumer choice this study explored factors that affect market driven compliance with both corporate average fuel economy cafe and greenhouse gas ghg standards together called the national program in the united states for phase i 2012 2016 and phase ii 2017 2025 we considered a consumer choice based simulation approach using the ma3t model to estimate the market acceptance of fuel efficiency fe technologies and alternative fuel technologies as reflected by new sales of light duty vehicle ldv because both full and extremely low fe valuations are common in the literature we use a moderate assumption of a 10 year perceived vehicle lifetime at a 7 annual discount rate in the baseline and include both extreme views 5 years and 15 years in the sensitivity analysis the study focuses on market driven compliance and therefore excludes manufacturers cross subsidization the model results suggest that the ldv industry is able to comply with both standards even without cross subsidization and with projected high technology cost mainly thanks to the multiple credit programs and technology advancements the compliance robustness while encouraging however is based on moderate market assumptions such as annual energy outlook 2016 reference oil price projection and moderate fe consumer valuation sensitivity analysis results reveal two significant risk factors for compliance low oil prices and consumers fe undervaluation

on the adjustment matrix in error correction models abstract this paper explores the determinants of the adjustment matrix in error correction models within two intertemporal models of the firm in a production smoothing model of inventories it is shown that the adjustment matrix contains the speed of adjustment of inventories as conjectured in previous work but this parameter matrix also contains the parameters from the autoregressive polynomials associated with the stochastic unobservable shocks in the model two empirical examples are provided suggesting that these unobservable shocks cannot be assumed to be serially uncorrelated in a flexible wage model of a labor market the impact upon the adjustment matrix of normalizing the cointegrating matrix is studied in contrast to one state variable problems normalization of the cointegrating matrix is arbitrary on economic and statistical grounds in this model and it is shown that even with serially uncorrelated shocks estimating the elements of the adjustment matrix may not provide an estimate of the speed of adjustment under some normalizations of the cointegrating matrix the implication of the analysis is that without guidance from an economic model about the interpretation of elements of the adjustment matrix under alternative normalizations of the cointegrating matrix or when unobservable shocks are serially correlated economic interpretation of estimates of the adjustment matrix will be hazardous

gasoline demand and car choice estimating gasoline demand using household information in recent years calls for carbon taxes as a policy tool to combat global warming have kept a discussion of the price and income elasticities of gasoline demand alive to date gasoline demand elasticity estimates are almost exclusively based on aggregate data that are subject to aggregation problems and make distributional concerns impossible to address by using household level data from the panel study of income dynamics psid and imputed fuel efficiency measures and gasoline prices i estimate household demand for gasoline and the corresponding price and income demand elasticities an attempt is made to include data on the car stock in the estimation since car portfolio and gasoline demand decisions are closely related empirical results from a selection corrected gasoline demand regression suggest low short run price and income elasticities and clear differences in gasoline demand across the population these results suggest that a gasoline tax is not likely to result in large decreases in gasoline consumption while potentially imposing hardship on identifiable segments of the population

increasing electric vehicle policy efficiency and effectiveness by reducing mainstream market bias abstract plug in electric vehicles pevs provide an opportunity for reducing energy use and emissions in the transportation sector currently a number of federal policies are in place to incentivize deployment of pevs to mainstream consumers with demographics and vehicle attribute preferences most common to today s new vehicle purchasers this article argues that policies intending to give pevs a foothold in the market should not focus on mainstream consumers and should instead focus on niche markets specifically carsharing and postal fleets and early adopters including green consumers two arguments can be made in support of eliminating the mainstream market bias of current policies toward a policy of cultivating niche markets the first is efficiency so far pev policies featuring a mainstream market bias have proven to be inefficient and costly the second is effectiveness it is becoming increasingly evident that pev policies would be more effective in achieving potential societal benefits if they focused on early adopters and niche markets using such approaches as strategic niche management accessible loans and financing and appropriately targeted incentives pev policies focused on early adopters and niche markets would create complementary system effects that will lead to increased pev market penetration and realization of intended societal benefits

rational inattention and energy efficiency abstractthis paper argues that it will often be rational for consumers to pay limited attention to energy efficiency when choosing among energy consuming durable goods like automobiles or home appliances the reason is that the proper valuation of energy efficiency requires time and effort but differences in efficiency across products will rarely be pivotal to choice when consumers have strong preferences regarding other product attributes the paper first explains why proper valuation of efficiency is difficult even in the presence of government energy labels it next develops a model that shows how to value additional information about energy efficiency in a discrete choice context it then uses data on automobiles to show that consumers experience only small welfare losses when forced to choose a car without detailed information about fuel costs finally the paper discusses the implications of rational inattention for both economic research and public policy

why has the introduction of natural gas vehicles failed in germany lessons on the role of market failure in markets for alternative fuel vehicles despite private investments exceeding two billion euros and tax incentives of more than 500 million euros the market share of natural gas vehicles ngvs in germany has lagged far behind expectations and behind market developments in other countries with total cost of ownership being on average lower for ngvs than for gasoline and diesel vehicles this raises the question of the existence of market failure in the german ngv market we use a case study approach where we combine quantitative data with insights from a multi industry expert panel and in depth interviews with experts from industry government and civil society in order to examine whether and how different types of market failure contribute to the status quo in the german market for ngvs we conclude that coordination failure in complementary markets an artificially created monopoly of service stations at motorways imperfect information bounded consumer rationality and principle agent problems are the most prominent market failures inhibiting the development of a functioning market for ngvs our results are instructive for the design of effective public policies and investor strategies aiming to create markets for alternative fuel vehicles

aggregation unit roots and the time series structure of manufacturing real wages the effects of both temporal and cross sectional aggregation on the estimated time series characteristics of manufacturing real wage data are examined the effects especially of temporal aggregation are found to be quite large and in accord with statistical theory the well known results of j altonji and o ashenfelter 1980 that real wages are a random walk and of c r nelson and c i plosser 1982 that real wages are an ima 1 1 process both seem to be entirely artifacts of temporal aggregation with the true models following processes that are much more complex and that display substantial cyclical behavior copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

inventories and strikes this paper analyses a dynamic model of bargaining and strikes in which the reservation wage of union members in each period is private information the model endogenizes the firm s decision to accumulate inventories of finished goods in order to enhance its bargaining position with higher inventories the firm makes a lower wage offer thereby accepting an increased probability of a strike the model can help explain empirical results that have found a positive correlation between wages and inventory accumulation it also shows that unless inventories are controlled for strike incidence will exhibit a spurious negative state dependence

conspicuous conservation the prius halo and willingness to pay for environmental bona fides abstract this paper develops a theory of conspicuous conservation a phenomenon related to conspicuous consumption in which individuals seek status through displays of austerity amid growing concern about environmental protection we identify a statistically and economically significant conspicuous conservation effect in vehicle purchase decisions and estimate a mean willingness to pay for the green signal provided by the distinctively designed toyota prius in the range of 430 4200 depending upon the owner s location results are related to the growing literature on green markets and suggest that policy should target less conspicuous conservation investments that will be under provided relative to those that confer a status benefit

more on the speed of adjustment in inventory models when empirical stock adjustment models of manufacturers inventories of finished goods are estimated there appear to be two local minima in the sum of squared residuals functions at one local minimum the estimated adjustment speed is typically quite high at the other it is typically quite low furthermore finding two sets of estimates that fit the data almost equally well does not appear to be a quirk of this particular application rather it stems from a fundamental identification problem that afflicts partial adjustment models of all kinds in the specific context of manufacturers inventories of finished goods the estimation procedure employed by maccini and rossana seems to pick out the solution with rapid adjustment and high serial correlation in the disturbances whereas the solution with slow adjustment and little serial correlation is more often the global minimum this abstract was borrowed from another version of this item

consumer durables evidence on the optimality of usually doing nothing the authors argue that lumpy nonconvex transaction costs are the norm for a wide range of economic decisions which are thus characterized by inertial behavior application of this idea to the consumption of durable goods yields an s s decision rule which when aggregated highlights the different expected behavior of average expenditure per purchase versus the number of purchases the empirical implications of this rule are presented and compared to other theories a battery of empirical tests generally supports the predictions of the model in particular it does a good job of explaining the time pattern of response of spending on durables to a change in income copyright 1992 by ohio state university press

energy efficiency versus gains in consumer amenities an example from new cars sold in sweden technological developments that increase energy efficiency result in net energy saving benefits provided the increased efficiency is not offset by enhanced consumer amenities this paper analyzes the technology development consumer amenities trade off for new cars sold in sweden between 1975 and 2010 we combine lessons learned from the policies in place and interviews with key actors in the car purchasing process with statistical modeling of trends in vehicle attributes and technological development until 2007 consumer amenities were continuously enhanced offsetting most of the efficiency gains of technological development there was no strong policy push toward energy efficiency in recent years two major shifts have occurred first there has been a shift in the majority of new cars sold from gasoline powered engines to diesel engines flex fuel vehicles have also contributed to a decline in the sales share of pure gasoline engines the observed shift of fuels especially to flex fuels has been encouraged by policies second after 2007 there have been major technological improvements while attributes related to consumer amenities have remained flat reversing the trends so that 77 of the technological development resulted in actual reduction of specific fuel consumption eu targets tax reforms and consumer awareness have contributed to this trend change

an empirical study on the behavior of hybrid electric vehicle purchasers abstract this paper empirically examines the factors influencing consumers choices concerning the purchase of hybrid electric vehicles hevs in addition the paper investigates whether purchasing hevs causes a rebound effect through which purchasers of hevs increase their annual vehicle mileage the results suggest that consumers who are more attentive to fuel economy may be inclined to choose hevs moreover the existence of the direct rebound effect is confirmed by the finding that the purchase of an hev leads to an increase in annual mileage per household greater mileage increases future fuel cost savings from using an hev relative to a conventional vehicle and thus potentially leads to increased fuel cost savings that offset the extra cost of choosing an hev however if the purchase of hevs leads to a considerable increase in annual mileage overall annual automotive co2 emissions per household may be significantly increased by using hevs

the production smoothing model is alive and well abstract monthly data in physical units for seven industries are used to examine the production smoothing hypothesis the results strongly support this hypothesis significant effects of expected future sales on current production are found for four industries and the estimated decision equations for all seven industries imply production smoothing behavior the previous negative results appear to be due to the use of data biased against the hypothesis the shipments and inventory data of the department of commerce the paper also shows that sensible results can be obtained from estimating approximations to decision equations as opposed to estimating euler equations

uncertainty loss aversion and markets for energy efficiency increasing energy efficiency is critical to mitigating greenhouse gas emissions from fossil fuel combustion reducing oil dependence and achieving a sustainable global energy system the tendency of markets to neglect apparently cost effective energy efficiency options has been called the efficiency gap or energy paradox the market for energy efficiency in new energy using durable goods however appears to have a bias that leads to undervaluation of future energy savings relative to their expected value this paper argues that the bias is chiefly produced by the combination of substantial uncertainty about the net value of future fuel savings and the loss aversion of typical consumers this framework relies on the theory of context dependent preferences the uncertainty loss aversion bias against energy efficiency is quantifiable making it potentially correctible by policy measures the welfare economics of such policies remains unresolved data on the costs of increased fuel economy of new passenger cars taken from a national research council study illustrate how an apparently cost effective increase in energy efficiency would be uninteresting to loss averse consumers

optimal dynamic tax evasion a portfolio approach abstract most tax evasion models are set in a timeless environment though this is not suitable for a study of revenues from financial activities where tax evasion occurs in a dynamic environment this study examines a representative agent aiming to maximize the expected utility from inter temporal consumption and could invest in both riskless and risky assets through tax evasion is possible only in the latter case the investor must pay a fine when his her evasion is detected with a given probability we show that i optimal consumption is higher with tax evasion ii optimal evasion is affected by neither the return nor the volatility of the risky asset iii evasion reduces investment in the risky asset and increases investment in the riskless asset iv evasion can be reduced more efficiently by increasing the fine rather than by increasing the frequency of controls v for a sufficiently high tax rate on the riskless asset the optimal evasion is zero and vi if the fine is proportional to the amount of taxes for only sufficiently low fines the yitzhaki 1974 paradox is confirmed

can the production smoothing model of inventory behavior be saved the production smoothing model of inventory behavior has a long and venerable history and theoretical foundations that seem very strong yet certain overwhelming facts seem not only to defy explanation within the production smoothing framework but actually to argue that the basic idea of production smoothing is all wrong most prominent among these is the fact that the variance of detrended production exceeds the variance of detrended sales this paper first documents the stylized facts then it derives the production smoothing model rigorously and explains how the model can be amended to make it consistent with the facts finally it reviews the theoretical and empirical evidence and tries to draw some tentative conclusions

consumers perceptions and misperceptions of energy costs this paper presents three initial stylized facts from the vehicle ownership and alternatives survey voas a nationally representative survey that elicits consumers beliefs about gasoline prices and the relative energy costs of autos with different fuel economy ratings first american consumers devote little attention to fuel costs when purchasing autos second consistent with a cognitive bias called mpg illusion consumers underestimate the fuel cost differences between low mpg vehicles and overestimate the differences between high mpg vehicles third americans mean and median expected future gas prices were above current prices and predictions of the futures market at the time of the survey although it is often argued that misperceived energy costs justify policies to encourage the sale of energy efficient durable goods these results show that misperceptions and expectations that differ from market information could either increase or decrease energy efficiency

the effect of standards and fuel prices on automobile fuel economy an international analysis abstract there is an intense debate over whether fuel economy standards or fuel taxation is the more efficient policy instrument to raise fuel economy and reduce co 2 emissions of cars the aim of this paper is to analyze the impact of standards and fuel prices on new car fuel economy with the aid of cross section time series analysis of data from 18 countries we employ a dynamic specification of new car fuel consumption as a function of fuel prices standards and per capita income it turns out that standards have induced considerable fuel savings throughout the world although their welfare impact is not examined here if standards are not further tightened then retail fuel prices would have to remain at high levels for more than a decade in order to attain similar fuel savings finally without higher fuel prices or tighter standards one should not expect any marked improvements in fuel economy under business as usual conditions

real interest rates and macroeconomic activity while standard discussions of the transmission mechanism of monetary policy tend to assume a strong and negative link between real interest rates and real macroeconomic activity and this appears to some extent to be borne out by simulation of large scale macroeconometric models the empirical evidence suggests that the link between real interest rates and macroeconomic aggregates such as consumption and investment is in fact somewhat tenuous the weak link between interest rates and aggregate consumption may be explained at a theoretical level while the apparently weak link between interest rates and investment is more puzzling although it may be related to neglect of issues such as uncertainty and the irreversibility of investment in empirical studies similarly evidence on the link between real interest rates and economic growth is mixed and this may be related to non linearities in the relationship the survey highlights the need for further research in this area

car notches strategic automaker responses to fuel economy policy notches where small changes in behavior lead to large changes in a tax or subsidy gure prominently in many policies but have been rarely examined by economists in this paper we analyze a class of notches associated with policies aimed at improving vehicle fuel economy we provide several pieces of evidence showing that automakers respond to notches in fuel economy policy by precisely manipulating fuel economy ratings so as to just qualify for more favorable treatment we then describe the welfare consequences of this behavior and derive a welfare summary statistic applicable to many contexts