The Effect of Income on Vehicle Demand: Evidence from China’s New Vehicle Market

Joshua Linn and Chang Shen

Journal of the Association of Environmental and Resource Economists, 2024, vol. 11, issue 1, 41 - 73

Abstract: As incomes continue rising, vehicle ownership is expected to grow dramatically in China and other emerging countries. For these countries, little causal evidence exists on the effect of income on vehicle ownership. Using city-level data on new car registrations and income in China from 2005 to 2017 and using export-led growth to isolate plausibly exogenous income variation, we estimate an elasticity of new car sales to income of about 2.5. Recent projections of vehicle sales in China have understated actual sales by 36%. To meet its climate objectives, China will need more aggressive policies than previous forecasts indicate.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/725910 (application/pdf)
http://dx.doi.org/10.1086/725910 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jaerec:doi:10.1086/725910

Access Statistics for this article

More articles in Journal of the Association of Environmental and Resource Economists from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().