Direct and cross price elasticities of demand for gasoline, diesel, hybrid and battery electric cars: the case of Norway

AIM: The primary goals of this research is (i) to derive direct and cross demand market response functions for automobile powertrains and their energy carriers and (ii) to assess how CO2 emissions from automobiles depend on vehicle and energy prices. METHODS: The market demand for automobiles with differing powertrains is studied by means of a discrete choice model. Statistically precise coefficient estimates are calculated by means of a highly disaggregate data set consisting of virtually all 1.8 million new passenger car transactions in Norway during 2002–2016. Having estimated the model, we derive market response parameters in the form of direct and cross price elasticities of demand for gasoline, diesel, ordinary hybrid, plug-in hybrid and battery electric cars. RESULTS: The own-price elasticity of gasoline driven cars is estimated at −1.08, and those of diesel driven, battery electric and plug-in hybrid electric cars at –0.99, −1.27 and −1.72, respectively, as of 2016 in Norway. The cross price elasticities of demand for gasoline cars with respect to the price of diesel cars, and vice versa, are estimated at 0.64 and 0.51, while the cross price elasticities of demand for battery electric cars with respect to the prices of gasoline and diesel driven cars come out at 0.36 and 0.48, respectively. A 1 % increase in the price of liquid fuel in general is found to reduce the average type approval rate of CO2 emission from new passenger cars by an estimated 0.19%. CONCLUSION: Fiscal policy measures affecting the prices of vehicles and fuel have a considerable potential for changing the long term composition of the vehicle fleet and its energy consumption, climate footprint and general environmental impact.

• Record URL:
  https://doi.org/10.1186/s12544-020-00454-2
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/18668887
• Supplemental Notes:
  • © 2021 Lasse Fridstrøm and Vegard Østli. The contents of this paper reflect the views of the author[s] and do not necessarily reflect the official views or policies of the Transportation Research Board or the National Academy of Sciences.
• Authors:
  • Fridstrøm, Lasse
  • Østli, Vegard
• Publication Date: 2021-1

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 3
• Serial:
  • European Transport Research Review
  • Volume: 13
  • Issue Number: 1
  • Publisher: Springer Publishing
  • ISSN: 1866-8887
  • EISSN: 1867-0717
  • Serial URL: http://link.springer.com/journal/12544
• Publication flags:

  Open Access (libre)

Subject/Index Terms

• TRT Terms: Demand; Diesel engines; Elasticity (Economics); Electric vehicles; Gasoline; Hybrid vehicles; Pollutants; Power trains; Prices
• Geographic Terms: Norway
• Subject Areas: Economics; Energy; Highways;

Filing Info

• Accession Number: 01765850
• Record Type: Publication
• Files: TRIS
• Created Date: Feb 24 2021 9:47AM