A behavioral analysis of private car use by households

Abstract

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In this study various aspects of ownership and use of private cars by households are studied. The private car has been at the centre of discussions about environmental problems for many years. The study starts with a discussion of the effectiveness of environmental policy with respect to the private car and concludes that price and tax instruments still appear to be valuable instruments, despite some prima facie evidence against them. Technical aspects of automobile engines are discussed subsequently and it is noticed that potential environmental benefits caused by technical developments are not always realized because of changes in behaviour. A brief summary of the development of the prices of automobile fuel shows that the variable cost of automobile use for gasoline drivers has certainly not increased during the past thirty years. By focusing attention on years in which there were relatively large changes in these prices it was, nevertheless, possible to estimate behavioural reactions to price changes. Increases in the gasoline price lead to lower fuel use per kilometre, decreases in the price to higher fuel use. The number of kilometres driven could also be shown to be influenced by changes in the fuel price. There appear to be interesting differences between the reactions to the price decrease in early 1986 caused by the fall in crude oil prices and the tax increase of 1991. In the next part of the study choice of fuel type is explained by a trade off between disadvantages associated with the use of diesel and LPG and a monetary benefit for drivers of large numbers of kilometres caused by the lower variable cost of these fuels. These lower cost appear to induce additional demand for kilometres. Finally the choice of commuting distance was analysed by means of a search model. Although workers do not appear to be footloose, the monetary evaluation of the resistance against additional commuting kilometres appears to fall short of the generalized travel cost involved.