 Assessing consumer valuations of future costs versus purchase prices in Japan's auto marketKiyoshi Arakawa Economics of Transportation, 2022, vol. 30, issue C Abstract: To tax vehicles such that market distortions are minimized and environmental goals are promoted, policymakers must determine whether consumers correctly assess automobile prices versus future costs of ownership. Drawing from data spanning 2006 to 2015 for Japan's new car market, we apply the aggregate random coefficients logit model to estimate consumer demand with rich substitution patterns. We find that Japanese consumers primarily focused on fuel costs and future registration taxes followed by vehicle purchase prices. This finding implies that promoting eco-friendly vehicles requires Japanese policymakers' attention to fuel and vehicle registration taxes. This finding also suggests that salient features of preferential tax treatment in the auto market distort consumer preferences toward future costs. Counterfactual experiments under a fixed amount of tax revenue reveal that raising fuel taxes improves average fuel economy more than registration taxes do at the expense of broader social welfare. Keywords: Vehicle choice; Vehicle taxation; Fuel efficiency; Energy paradox (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecotra:v:30:y:2022:i:c:s2212012222000119 DOI: 10.1016/j.ecotra.2022.100260 Access Statistics for this article Economics of Transportation is currently edited by Mogens Fosgerau and Erik Verhoef More articles in Economics of Transportation from Elsevier |
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