Can subsidy programs lead consumers to select “greener” products?: Evidence from the Eco-car program in Japan
Section snippets
Background and research objective
For many years, countries have implemented various energy conservation measures aimed at reducing energy consumption and greenhouse gas (GHG) emissions from their household sectors. Despite such efforts, GHG emissions from the household sector have continued to steadily increase. Considering the slow progress of energy saving in the household sector, in recent years, countries began providing consumers with subsidies for the purchase of energy-efficient products. Although it has been confirmed
Literature review about consumers’ choices of next generation vehicles
Previous studies have identified the types of households that adopt HEVs. Hackbarth and Madlener (2013) conducted the stated preferences discrete choice experiment for German households. They considered vehicle choices among seven fuel-type vehicles: (1) natural gas; (2) hybrid electric; (3) plug-in hybrid electric; (4) fully battery electric; (5) hydrogen; (6) conventional gasoline; and (7) conventional diesel. They reported that younger, well-educated, and environmentally aware consumers tend
Eco-car program
According to statistics from the Automobile Inspection and Registration Information Association (2019), the number of registered passenger vehicles increased from 55.3 million in 2004 to 61.6 million in 2018 (Fig. 1a and b). However, the growth rate of vehicle registration has gradually slowed down due to the aging population in Japan. On the other hand, the number of HEVs increased from 0.13 million in 2004 to 7.5 million in 2018. Therefore, the growth rate of HEVs is much higher than that of
Data
For the empirical analysis, we use micro-level data from the Japanese NSFE. The NSFE is a nationwide cross-sectional survey initiated in 1959 that is conducted every 5 years. NSFE collects data on households’ socioeconomic characteristics, such as income/expenditure, savings/liabilities, and ownership of durable goods, as well as information related to homes, such as dwelling characteristics and site area. In addition, the NSFE collects vehicle-related information such as the number of vehicles
Effect of the Eco-car program on vehicle selection
We remove households that own multiple vehicles and focus on households that only own one vehicle. We further focus on households that purchased a new vehicle between 2004 and 2014. Then, we conduct two types of empirical analyses. In the first analysis, we pool all the households and identify the type of households that purchase HEVs. In addition, we assess the impact of the Eco-car program on the vehicle selection.
Based on the MNL model, we estimate the probability of selecting one of the
Effect of the Eco-car program on vehicle selection
Table 3 presents the results of the MNL model of Equation (1), which pools the samples of all sampling periods. Because the precise purchase price is not available, we estimated the WAP of three types of vehicles (HEV, CGV, and RGV) from the market data and used it for the following estimation. The detailed calculation method of WAPs is described in the Appendix. Considering the possibility that the variation in the numbers of vehicle models may affect households’ vehicle selection, we
Conclusions and policy implications
In this study, we analyzed the micro-level data of vehicle selection from the NSFE and examined how the Eco-car program affected households’ vehicle selection. The empirical results from MNL models demonstrate that the probability of HEV selection increased substantially during the program period and remained at a high level after the program ended.
Household income has been an important factor in deciding between HEVs and CGVs. Higher-income households tend to choose HEVs over CGVs, whereas
CRediT authorship contribution statement
Jiaxing Wang: Formal analysis, (Application of statistical), Data curation, Investigation, Methodology, Writing – original draft, Writing – review & editing, Visualization. Shigeru Matsumoto: Conceptualization, Funding acquisition, Supervision, Writing – original draft, Writing – review & editing.
Acknowledgment
This research was supported by the Environment Research and Technology Development Fund (2–1707) of the Environmental Restoration and Conservation Agency and KAKENHI (18K01578) of the Japan Society for the Promotion of Science. An earlier version of this paper was presented at the 12th Economics & Finance Conference of International Institute of Social and Economic Sciences, as well as the 8th Congress of the East Asian Association of Environmental and Resource Economics.
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