A generic discrete choice model of automobile purchase

Vegard Østli, Lasse Fridstrøm*, Kjell Werner Johansen, Yin Yen Tseng

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Purpose: The introduction of novel fuel and propulsion technologies, such as battery, (plug-in) hybrid and fuel cell electric vehicles, and the need to combat the exhaust emission of local and global pollutants from the passenger car fleet have enhanced the political interest in the vehicle purchase choices made by private households and firms, and in how these choices can be influenced through fiscal and regulatory penalties and incentives. Methods: As a tool to understand and analyse such questions, we have developed a generic nested logit model of automobile choice, based on complete disaggregate vehicle sales data for Norway for the period ranging from January 1996 until July 2011. The data set contains 1.6 million vehicle transactions. Results: Being sensitive to changes in the vehicle purchase tax and the fuel tax, the model discriminates well between various fiscal policy scenarios. In using the model for such purposes, one is greatly helped by the fact that the model distinguishes between price changes due to taxation and those originating from the manufacturing or marketing side. Conclusions: The strongly CO2 graduated vehicle purchase tax, with exemptions granted for battery electric vehicles, is shown to have a major impact on the average type approval rate of CO2 emissions from new passenger cars registered in Norway. The fuel tax also helps induce car customers to buy low emission vehicles.

Original languageEnglish
Article number16
JournalEuropean Transport Research Review
Volume9
Issue number2
DOIs
Publication statusPublished - 1 Jun 2017

Funding

The basic research underlying this study was made possible through the TEMPO project funded by the Research Council of Norway (grant number 195191) and supported by 12 stakeholder partners, viz. the Norwegian Public Roads Administration, the Ministry of the Environment, the National Rail Administration, the Norwegian State Railways (NSB), Akershus County Council, Ruter AS, the Norwegian Automobile Association (NAF), NHO Transport, NOR-WAY Bussekspress, DB Schenker, Norsk Scania AS, and Vestregionen. Some of the policy analyses reported here were made possible through a grant from the Swedish-Norwegian BISEK programme. The last mile funding for the analysis presented herein came from the Institute of Transport Economics (T?I). The analysis relies on data provided by the Norwegian Road Federation (OFV). The authors are indebted to the editor and to two anonymous referees for their constructive comments, which helped improve the paper. All contributions are gratefully acknowledged.

FundersFunder number
Norges forskningsråd195191

    Keywords

    • CO emissions
    • Fiscal incentives
    • Nested logit
    • Passenger cars
    • Purchase tax

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