University of Copenhagen
Department of Economics
Oster Farimagsgade 5, 26.3.01
DK-1353 Copenhagen K, Denmark
NBER Working Papers and Publications
|May 2019||Equilibrium Trade in Automobile Markets|
with Kenneth Gillingham, Fedor Iskhakov, John P. Rust, Bertel Schjerning: w25840
We introduce a computationally tractable dynamic equilibrium model of the automobile market where new and used cars of multiple types (e.g. makes/models) are traded by heterogeneous consumers. Prices and quantities are determined endogenously to equate supply and demand for all car types and vintages, along with the ages at which cars are scrapped. The model allows for transactions costs, taxes, flexible specifications of car characteristics, consumer preferences, and heterogeneity. We apply the model to two examples: a revenue-neutral replacement of the new vehicle registration tax with a higher fuel tax and a hypothetical “merger to monopoly” in an oligopolistic new car market. We show substantial gains in consumer welfare from the tax policy change, as well as important effects on gove...
|December 2016||A Tale of Two Tails: Commuting and the Fuel Price Response in Driving|
with Kenneth Gillingham: w22937
The consumer price responsiveness of driving demand is central to the welfare consequences of fuel price changes. This study uses rich data covering the entire population of vehicles and consumers in Denmark to find a medium-run price elasticity of driving of -0.30. We uncover an important feature of driving demand: two small groups of much more responsive households that make up the lower and upper tails of the work distance distribution. The first group lives close to work in urban areas. The second group lives outside of major urban areas and has the longest commutes. Access to public transport appears to be the force behind the existence of the tails, enabling the switch away from driving. We find that a fuel price increase of 1 DKK/liter implies an average deadweight loss of 0.66 DKK/...
Published: Kenneth Gillingham, 2018. "A Tale of Two Tails: Commuting and the Fuel Price Response in Driving," Journal of Urban Economics, . citation courtesy of