Measures to Promote Green Cars: Evaluation at the car variant level

Author Name KITANO Taiju (Aoyama Gakuin University)
Creation Date/NO. June 2016 16-E-075
Research Project Basic Research for a New Industrial Policy
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Automobile firms commonly offer multiple variants for each of their car models. Heterogeneity at the variant level is an important element to be considered when assessing attribute-based policy interventions, such as tax incentives and subsidy for green cars, because of substantial variant-level heterogeneity in the attributes within a model. This paper presents a discrete choice model of product differentiation at the variant level, and estimates the structural parameters of the econometric model using data at different levels of aggregation: model-level sales and variant-level prices and attributes. Using these estimates, this paper examines the policies to promote green cars in Japan.