Vehicle Choices, Miles Driven, and Pollution Policies

35 Pages Posted: 27 Sep 2005 Last revised: 6 Oct 2014

See all articles by Ye Feng

Ye Feng

University of Texas at Austin - Department of Economics

Don Fullerton

University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Li Gan

Texas A&M University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2005

Abstract

Mobile sources contribute large percentages of each pollutant, but technology is not yet available to measure and tax emissions from each vehicle. We build a behavioral model of household choices about vehicles and miles traveled. The ideal-but-unavailable emissions tax would encourage drivers to abate emissions through many behaviors, some of which involve market transactions that can be observed for feasible market incentives (such as a gas tax, subsidy to new cars, or tax by vehicle type). Our model can calculate behavioral effects of each such price and thus calculate car choices, miles, and emissions.A nested logit structure is used to model discrete choices among different vehicle bundles. We also consider continuous choices of miles driven and the age of each vehicle. We propose a consistent estimation method for both discrete and continuous demands in one step, to capture the interactive effects of simultaneous decisions. Results are compared with those of the traditional sequential estimation procedure.

Suggested Citation

Feng, Ye and Fullerton, Don and Gan, Li, Vehicle Choices, Miles Driven, and Pollution Policies (August 2005). NBER Working Paper No. w11553. Available at SSRN: https://ssrn.com/abstract=785011

Ye Feng

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

Don Fullerton (Contact Author)

University of Illinois at Urbana-Champaign - Department of Finance ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
(217) 244-3621 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Li Gan

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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