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- Coeff. St. Error Coeff. St. Error Price/Inc. -6.51 (0.45) Fuel Cost-0.53 (0.01) 0.05 (0.03) Horsepower 1.48 (0.21) 1.78 (0.10) Weight 0.22 (0.21) 4.32 (0.16) Footprint 0.88 (0.05) 0.58 (0.04) Foreign-0.92 (0.03) 0.02 (0.16) Height 0.02 (0.02) Doors 0.50 (0.11) The table shows estimated taste parameters from a random coefficient logit estimation on the the car market for seven EU countries using data from 1998 to 2007. Taste distributions are assumed to be normal, and mean and standard deviations are estimated for selected characteristics. Additional controls are fuel type by market dummies, months for sale if less than 12, country fixed effects, linear time trend, body type fixed effects, vehicle class fixed effects and brand fixed effects. Model is estimated using a two-step GMM using approximate optimal instruments with sum of characteristics and cost shifter instruments for prices.
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- Location Figure plots coefficients from a regression of the performance gap in li/100km, on release year fixed effects. Coefficients correspond to regressions from Table A.6. Figure A.3: Gap between on-road and official fuel consumption per firm in levels Audi BMW Citroën Ford Opel Peugeot Renault Toyota Volkswagen Volvo Audi BMW Citroën Ford Opel Peugeot Renault Toyota Volkswagen Volvo Audi BMW Citroën Ford Opel Peugeot Renault Toyota Volkswagen Volvo 0 .2 .4 .6 .8 1 1.2 1.4 1.6 1.8 2 Difference in Li/100km 1998-2006 2007-2009 2010-2014 Figure shows estimated coefficients and standard errors from regressing the performance gap in levels on three sets of model release years (early, middle and late) per automaker, the data is restricted to the ten brands with most observations.
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- One approach is to assume that release year effects are completely flat prior to 2006, so that a single release year dummy for that period is included. A full set of age effects can be estimated based on that period, and age and time effects can both be included while still identifying the remaining release year effects. Column (4) reports results from a specification that does that. Results are qualitatively similar, though the magnitude of our estimated performance gap does change somewhat, falling from 41% to 34% as compared to column (3), which has the same time period controls. As discussed below, we provide alternative approaches of addressing age effects in the appendix, which yield qualitatively similar results to the results reported here.
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Parry, Ian W.H., David Evans, and Wallace E. Oates. 2014. âAre Energy Efficiency Standards Justified?â Journal of Environmental Economics and Management 67:104â125.
- R2-2 R2.1e Plot the ramp up of the standards in Figure 1 as well. The upward trend in figures 1 and 3 suggests a gradual increase in gaming post-2007 driven, presumably, by ratcheting of the benchmark.
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- R2.1a The empirical exercise brings novel data to bear and clearly illustrates an increase in the performance gap post 2007. A more thorough investigation would strengthen the authorsâ interpretation of the results.
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- R2.1f 2006 seems an outlier in figure 3, potentially worth a mention or further investigation.
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- R3.14 I believe that this paper is not the first to provide evidence of gaming in the context of fuel economy ratings. Isnât Sallee and Slemrod (2012) that provide the first empirical evidence that automakers game fuel economy estimates. Thank you for pointing out the relationship between that paper and our current manuscript.
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- R3.8 First, the simulation model considers a different mechanism leading to gaming that the one that has been considered in the theory section and demonstrated in the empirical section. To be 47 A recent literature (see Busse, Knittel, and Zettelmeyer 2013, Allcott and Wozny 2014, Sallee, West, and Fan 2016, Grigolon, Reynaert, and Verboven Forthcoming) has shown that buyers do take fuel consumption ratings into account when purchasing a vehicle. In a field experiment Allcott and Knittel (2017) show that treating buyers with detailed information about fuel consumption has no impact on their choice.
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Reynaert, Mathias and Frank Verboven. 2014. âImproving the performance of random coefficients demand models: The role of optimal instruments.â Journal of Econometrics 179 (1):83â98. URL https://ideas.repec.org/a/eee/econom/v179y2014i1p83-98.html. Rhodes, Andrew and Chris M. Wilson. Forthcoming. âFalse Advertising.â RAND Journal of Economics .
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Sallee, James M. and Joel Slemrod. 2012. âCar Notches: Strategic Automaker Responses to Fuel Economy Policy.â Journal of Public Economics 96 (11-12):981â999.
Sallee, James M., Sarah E. West, and Wei Fan. 2016. âDo Consumers Recognize the Value of Fuel Economy? Evidence from Used Car Prices and Gasoline Price Fluctuations.â Journal of Public Economics 135:61â73.
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- Table A.8: Diversion Ratios Own Price Elast. Outside Good FC Q1 FC Q2 FC Q3 FC Q4 Fuel Cons Q1-4.47 0.45 0.15 0.21 0.12 0.08 Fuel Cons Q2-4.78 0.41 0.15 0.22 0.13 0.09 Fuel Cons Q3-5.30 0.37 0.16 0.23 0.13 0.10 Fuel Cons Q4-7.36 0.29 0.17 0.26 0.16 0.13 The table shows the average own price elasticity in each of the fuel consumption quartiles in the vehicles included in the counterfactual (Netherlands, year 2007). Column II gives the average diversion ratio to the outside good, while Column III-VI give diversion ratios from the row fuel consumption quartile to the column fuel consumption quartile. The diversion ratio is defined as (âsk/âpj)/ | âsj/âpj | so that Coluln II-VI sum up to 1.
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- The policy was announced in 2007 but did not start to bind until 2012. The policy schedule has not changed since 2007. There was a phase in between 2012 and 2015, but all automakers complied with the full standard by 2014. We do not think the increase in gaming between 2007 and 2015 is necessarily a response to a ratcheting of the benchmark (though they are certainly correlated in the time series). Instead, we think the gradual increase is due to automakers pushing their products forward with the goal of achieving compliance by the end of the period. In addition to the standard, there are several changes in national taxes after the announcement of the standard in 2007 but these are much more difficult to plot. We have added a more detailed discussion of the policy in Appendix A.2 to make all this clearer.
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- The regulation was proposed by the European Commission in 2007 and became a European law in 2009. In 2012, 65% of manufacturerâs sales had to comply with the emission standard. This rose to 75% in 2013 and 80% in 2014, and the standard was fully binding from 2015 onward. Every firm succeeded in reaching the full target by 2014.
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- TNO. 2011. âSupport for the revision of Regulation (EC) No 443/2009 on CO2 emissions from cars.â URL https://ec.europa.eu/clima/sites/clima/files/transport/vehicles/cars/ docs/study_car_2011_en.pdf. Framework Contract No ENV.C.3./FRA/2009/0043.
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- TravelCard Netherlands Price (euro) 31,672 13,367 40,767 29,676 Fuel Consumption (L/100km) 6.74 1.60 7.89 2.46 Vehicle Weight in kg 1,344 230 1,409 308 Diesel Engines 0.45 0.50 0.36 0.48 Summary statistics for the TravelCard sample and the full dutch market between 1998 and 2011. Table A.3: Variance decomposition Ï2 d Ï2 i Ï2 j Ï2 n Mean 2.11 0.21 1.35 0.56 Standard deviation 0.57 0.03 0.45 0.11 Variance decomposition (%) 100 10.36 62.34 27.30 Standard deviation 2.54 6.76 4.40 Ï2 d is the total variance in rnij, Ï2 i is the variation attributable to differences across individuals driving the same vehicle, Ï2 j is the covariance between drivers in the same vehicle, Ï2 n is the variation across refueling visits of the same driver in the same vehicle. The variance decomposition is performed separately for each release year, and the mean and standard deviation across years are reported in table.
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Walker, Reed W. 2013. âThe Transitional Costs of Sectoral Reallocation: Evidence from the Clean Air Act and the Workforce.â Quarterly Journal of Economics 128 (4):1787â1835.
- We use a panel containing sales, prices and characteristics for all new vehicle sales in seven European countries between 1998 and 2007.43 We only use data from before 2008 to estimate demand, so that our estimates come from a period in which the performance gap was stable.
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Weyl, E. Glen and Michael Fabinger. 2013. âPass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition.â Journal of Political Economy 121 (3):528â583.
- When producers exceed the standard they have to pay premiums for excess emissions. The premium is e5 per unit sold for the first excess g/km and increases to e95 per unit above 134 g/km. A manufacturer obtaining a sales weighted emission of 146 g/km, the average in 2007, would face a significant penalty of e1,280 per vehicle (against an average sales price of e22,250).
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