Business Publications
Document Type
Article
Publication Date
10-2017
Volume
68
Journal
Energy Economics
First Page
454
URL with Digital Object Identifier
https://doi.org/10.1016/j.eneco.2017.10.026
Last Page
465
Abstract
Using data on all vehicles registered in Canadian provinces from 2000-2010, we estimate the elasticity of the fuel economy of the new vehicle stock with respect to gasoline price. We demonstrate that a 10% increase in gasoline price causes a 0.8% improvement in the fuel economy of new vehicles. We show that consumers in dense urban areas respond more to changes in fuel price than other consumers and that fuel taxes cause a much larger response in vehicle fuel economy than other components of the gasoline price. This finding has important implications for the assessment of market-based policies for reducing greenhouse gas emissions.
Notes
This is the author accepted version of an article that appears in Energy Economics. The final published version can be found at https://doi.org/10.1016/j.eneco.2017.10.026