Published in:Resources for the Future Discussion Paper 16-26-REV
Extent:
1 Online-Ressource (57 p)
Language:
English
DOI:
10.2139/ssrn.2849536
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 13, 2016 erstellt
Description:
Although economic theory suggests that market size and fuel costs affect fuel-saving technology adoption by vehicle manufacturers, there is very little empirical evidence. We document a strong connection between market size, as measured by a vehicle's sales, and technology adoption. Using a demographics-driven demand shifter to instrument for market size, we find that a 10 percent increase in market size raises power train efficiency by 0.2 percent, compared with a mean improvement rate of 1.4 percent per year between 1997 and 2013. Higher fuel prices affect technology adoption directly by influencing willingness to pay for fuel cost savings, and indirectly by influencing market size. The results have two implications: policies promoting alternative-fuel vehicles will be less effective than previously thought; and fuel taxes have different effects ontechnology adoption than do fuel economy standards and feebates