OECD/ITF Joint Transport Research Centre Discussion Papers
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- International Transport Forum Discussion Papers
The International Transport Forum at the OECD is an intergovernmental organisation with 52 member countries. It acts as a strategic think tank for transport policy and organizes an annual summit of ministers. Our work is underpinned by economic research, statistics collection and policy analysis, often undertaken in collaboration with many of the world's leading research figures in academia, business and government. This series of Discussion Papers is intended to disseminate the International Transport Forum’s research findings rapidly among specialists in the field concerned.
- ISSN: 20708270 (online)
- https://doi.org/10.1787/20708270
The Demand for and the Supply of Fuel Efficiency in Models of Industrial Organisation
This report organizes and discusses empirical estimates of the effects of fuel prices and fuel
emission standards on consumer and firm behaviour. I touch only briefly on model-free estimates. The
focus is on results based on explicit models, taken mostly from the industrial organization literature.
First, I review studies that identify the willingness to pay for fuel efficiency using static and dynamic
models of vehicle demand. Next, I take explicitly into account that firms will adjust their product
portfolios and the characteristics of the vehicles they offer. These decisions will have an impact on the
choice set from which consumer demand is estimated and on the trade-off that consumers face
between fuel efficiency and other desirable characteristics. Finally, I discuss models where firms
choose to invest in innovations to achieve fuel efficiency gains without sacrificing characteristics.
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