Journal
ENERGY POLICY
Volume 137, Issue -, Pages -Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2019.111181
Keywords
Energy efficiency; Car segments; Price elasticities of demand; Labelling
Funding
- H2020: ENABLE-EU [727524]
- Basque Government (Spain) through the BERC 2018-2021 programme
- Spanish Ministry of Science, Innovation and Universities (MICINN) (Spain) through BC3's Maria de Maeztu excellence accreditation [MDM-2017-0714]
- Government of Spain
- European Regional Development Fund [RTI2018-093692-B-I00]
- H2020 Societal Challenges Programme [727524] Funding Source: H2020 Societal Challenges Programme
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Improved energy efficiency can help reduce pollution, contribute to energy security, and help consumers save money. This paper explores energy labelling schemes as a policy instrument for promoting energy-efficient cars in Spain. Specifically, it explores consumer responses to changes in vehicle prices. We derive the demand responses for two different efficiency labelling schemes: absolute and relative. To that end, we calculate own- and cross-price elasticities of demand for cars with efficiency labels on the Spanish car market. The results show that the elasticities for more efficient cars are in general higher. However, in the specific case of sedans, the elasticities depend on assumptions about how consumers decide which car to purchase. If consumers are concerned about the absolute energy performance of cars independently of other attributes, and thus pay attention to absolute labelling, demand for more efficient cars is more elastic than demand for less efficient cars. If consumers choose the car segment first and then the energy performance, using the relative label, the opposite result is found. The results suggest that both relative and absolute labelling schemes can be useful, depending on how consumers make their decisions. It might also be possible to design a mixed system.
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