Gasoline Price and New Vehicle Fuel Efficiency: Evidence from Canada

31 Pages Posted: 31 May 2016

See all articles by Nicholas Rivers

Nicholas Rivers

University of Ottawa - Graduate School of Public and International Affairs

Brandon Schaufele

University of Western Ontario - Richard Ivey School of Business

Date Written: May 30, 2016

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.

Keywords: gasoline demand, vehicle choice, elasticity

JEL Classification: c23, r48

Suggested Citation

Rivers, Nicholas and Schaufele, Brandon, Gasoline Price and New Vehicle Fuel Efficiency: Evidence from Canada (May 30, 2016). Available at SSRN: https://ssrn.com/abstract=2786667 or http://dx.doi.org/10.2139/ssrn.2786667

Nicholas Rivers (Contact Author)

University of Ottawa - Graduate School of Public and International Affairs ( email )

75 Laurier Avenue East
Ottawa, Ontario K1N 6N5
Canada

Brandon Schaufele

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
78
Abstract Views
661
rank
314,991
PlumX Metrics