Do High Oil Prices Matter? – Evidence on the Mobility Behavior of German Households

Manuel Frondel and Colin Vance

No 72, Ruhr Economic Papers from Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen

Abstract: Focusing on travel survey data from Germany, this paper investigates the determinants of automobile travel, with the specific aim of quantifying the effects of fuel prices and fuel economy. The analysis is predicated on the notion that car mileage is a two-stage decision process, comprising the discrete choice of whether to own a car and the continuous choice of distance traveled. To capture this process, we employ censored regression models consisting of Probit and OLS estimators, which allows us to gauge the extent to which sample selectivity may bias the results. Our elasticity estimates indicate a significant positive association between increased fuel economy and increased driving, and a significantly negative fuel-price elasticity, which ranges between –35% and –41%.Taken together, these results suggest that fuel taxes are likely to be a more effective policy measure in reducing emissions than fuelefficiency standards.

Keywords: Automobile travel; rebound effect; two-part model (search for similar items in EconPapers)
JEL-codes: D13 Q41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-ene and nep-ure
Date: 2008-10

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Journal Article: Do High Oil Prices Matter? Evidence on the Mobility Behavior of German Households (2009)
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