Safer or Cheaper? Household Safety Concerns, Vehicle Choices, and the Costs of Fuel Economy Standards

Young-Young Choi, Yizao Liu () and Ling Huang

No 205797, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: In this paper, we formulate and estimate a mixed logit model of consumer vehicle choices with micro-level data to examine the effect of safety concerns on their vehicle choices, especially on the preference for various vehicle characteristics linked to vehicle safety (MPG, weight, size, etc). Further, using the demand estimates, we simulate consumers’ vehicle choices under alternative fuel economy standards that will result in new product offerings from automakers. We then calculate and compare the welfare change for consumers with different safety concerns. The estimation results suggest that consumers’ safety concerns have significant impacts on their vehicle choices and their preference over safety-related vehicle characteristics.

Keywords: Demand and Price Analysis; Industrial Organization; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 12
Date: 2015
New Economics Papers: this item is included in nep-dcm, nep-ene and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:205797

DOI: 10.22004/ag.econ.205797

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