Gasoline Prices, Government Support, and the Demand for Hybrid Vehicles in the U.S.
Duke University - Department of Economics
Cornell University - School of Applied Economics and Management
February 26, 2009
We analyze the determinants in the demand for hybrid vehicles and examine government programs that aim to promote the adoption of these vehicles. We find that hybrid vehicle sales in 2006 would have been 37 percent lower had gasoline prices stayed at the 1999 levels while the effect of the federal income tax credit program is estimated at 20 percent in 2006. Our results suggest that under the income tax credit program, the cost of reducing gasoline consumption was $75 per barrel in government revenue and that of CO2 emission reduction was $177 per ton. We show that the cost-effectiveness of federal tax programs can be improved by adopting a flat rebate scheme.
Number of Pages in PDF File: 42
Keywords: Hybrid cars, gasoline prices,demand estimation
JEL Classification: L62, Q4, Q5
Date posted: February 26, 2009 ; Last revised: March 28, 2015
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