01698010

Component

Consumer valuation of fuel economy is probably the most important factor in debates on fuel economy standards, but is still highly controversial. Existing studies focus on estimating its average value, but largely ignore its heterogeneity. This study quantified the significance of assuming heterogeneity in consumer valuation of fuel economy on the estimated compliance with fuel economy standards, with two approaches. One is mathematical deduction on how the heterogeneity affects the estimated market acceptance of high-efficiency vehicles. The other one is a consumer choice based simulation method to analyze the heterogeneity impacts on the compliance with the fuel economy standards for the entire light duty vehicle fleet in the U.S. The authors' findings suggest that the direction of the impact of heterogeneity assumption depends on market positions of high-efficiency vehicles: (1) with the “Likely-Accept” condition, where high-efficiency vehicles sell well and the CAFE compliance is highly possible, the heterogeneity assumption can add additional risks to the compliance; and (2) with the “Likely-Reject” condition where the fuel economy standards may have difficulty in compliance, the heterogeneity can reduce the risks and improve the compliance outcome. The two conditions mainly depend on consumers’ average valuation of fuel economy in the market, and are also affected by other factors, such as incremental cost of fuel efficiency technologies and future oil price projections. It is concluded that consideration of fuel economy valuation heterogeneity is important in fuel economy standard analysis.

This paper was sponsored by TRB committee ADC70 Standing Committee on Transportation Energy.

19-00708

English

6p

2019

Transportation Research Board 98th Annual Meeting

Digital/other

Figures; References; Tables

Compliance; Consumer behavior; Consumers; Fuel consumption; Markets; Standards; Valuation

Fuel-efficient vehicles

Economics; Energy; Highways; Policy; Vehicles and Equipment

Transportation Research Board Annual Meeting 2019 Paper #19-00708

TRIS, TRB, ATRI

Dec 7 2018 9:44AM