Household demand and willingness to pay for hybrid vehicles

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

This paper quantitatively evaluates consumers' willingness to pay for hybrid vehicles by estimating the demand of hybrid vehicles in the U.S. market. Using micro-level data on consumer purchases of hybrid and non-hybrid vehicles from National Household Travel Survey 2009, this paper formulates a mixed logit model of consumers' vehicle choices. Parameter estimates are then used to evaluate consumers' willingness to pay for hybrids. Results suggest that households' willingness to pay for hybrids ranges from $963 to $1718 for different income groups, which is significantly lower than the average price premium (over $5000) of hybrid vehicles, even when taking the fuel costs savings of hybrid vehicles into consideration. The differences reveal that although the market has shown increasing interest in hybrid vehicles, consumers' valuation of the hybrid feature is still not high enough to compensate for the price premium when they make new purchases. Policy simulations are conducted to examine the effects of raising federal tax incentives on the purchase of hybrid vehicles.

Original languageEnglish (US)
Pages (from-to)191-197
Number of pages7
JournalEnergy Economics
Volume44
DOIs
StatePublished - Jan 1 2014

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Hybrid vehicles
Taxation
Willingness-to-pay
Hybrid vehicle
Household demand
Purchase
Costs

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Energy(all)

Cite this

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title = "Household demand and willingness to pay for hybrid vehicles",
abstract = "This paper quantitatively evaluates consumers' willingness to pay for hybrid vehicles by estimating the demand of hybrid vehicles in the U.S. market. Using micro-level data on consumer purchases of hybrid and non-hybrid vehicles from National Household Travel Survey 2009, this paper formulates a mixed logit model of consumers' vehicle choices. Parameter estimates are then used to evaluate consumers' willingness to pay for hybrids. Results suggest that households' willingness to pay for hybrids ranges from $963 to $1718 for different income groups, which is significantly lower than the average price premium (over $5000) of hybrid vehicles, even when taking the fuel costs savings of hybrid vehicles into consideration. The differences reveal that although the market has shown increasing interest in hybrid vehicles, consumers' valuation of the hybrid feature is still not high enough to compensate for the price premium when they make new purchases. Policy simulations are conducted to examine the effects of raising federal tax incentives on the purchase of hybrid vehicles.",
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Household demand and willingness to pay for hybrid vehicles. / Liu, Yizao.

In: Energy Economics, Vol. 44, 01.01.2014, p. 191-197.

Research output: Contribution to journalArticle

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