The Price of Energy Efficiency in the Spanish Car Market

Ibon Galarraga, Ana Ramos () and Josu Lucas
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Ana Ramos: Rede (Universidade de Vigo) and Economics for Energy
Josu Lucas: Basque Centre foro Climate Change (Bilbao, Spain)

Working Papers from Economics for Energy

Abstract: Due to climate change, energy dependence and other energy-related issues, most developed countries are attempting to reduce fossil-fuel use in the transport sector. Accordingly, there are several instruments that have been in place for many years, such as mandatory design standards, taxes on fuels, car purchase and ownership, and energy efficiency labels. Yet it is still not clear whether consumers value energy efficiency as a characteristic of vehicles. In this paper we use the European labelling system for light vehicles, which classifies automobiles according to their relative fuel consumption levels, as a novel, alternative indicator for energy efficiency. Moreover, we use a unique database that incorporates official commercial prices along with prices obtained through Ômystery shoppingÕ at a selection of Spanish car retailers. We apply the hedonic price method to this database to estimate the price functions for vehicles and thereby obtain the marginal price of high-rated vehicles in terms of energy efficiency. Our results show that automobiles labelled A and B are sold at prices 2.1 to 9.0 percent higher than those of vehicles with similar characteristics but lower energy-efficiency labels.

Keywords: Spain; transport; energy; efficiency; hedonic methods (search for similar items in EconPapers)
JEL-codes: Q41 Q48 R41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The price of energy efficiency in the Spanish car market (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:efe:wpaper:02-2013

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