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The principal-agent problem and transport energy use: Case study of company lease cars in the Netherlands

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  • Graus, Wina
  • Worrell, Ernst

Abstract

Barriers exist for improvement of energy efficiency, of which the principal-agent problem is considered an important one. The principal-agent problem is a potential barrier for energy policies based on economic instruments, as the decision maker may be partially insulated from the price signal given by such policies. We estimate the size and the impact of the principal-agent problem for cars provided by companies as a benefit to employees in the Netherlands. Of all passenger cars in the Netherlands, 11% is classified as company cars, which consume 21% of the total energy consumption by passenger cars. As company cars are newer, operate more diesel engines, but are also larger, the fuel efficiency is slightly worse than that of private cars. Company cars seem to drive longer distances for commuting than the national average of private cars. Together, this might result in a net 1-7% increase of all fuel use of passenger cars in the Netherlands. This indicates that there is potential to reduce energy consumption of company cars and a need for policies aimed at improving energy efficiency of company cars.

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  • Graus, Wina & Worrell, Ernst, 2008. "The principal-agent problem and transport energy use: Case study of company lease cars in the Netherlands," Energy Policy, Elsevier, vol. 36(10), pages 3745-3753, October.
    • Handle: RePEc:eee:enepol:v:36:y:2008:i:10:p:3745-3753
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    Cited by:

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    2. Rehmatulla, Nishatabbas & Smith, Tristan, 2015. "Barriers to energy efficiency in shipping: A triangulated approach to investigate the principal agent problem," Energy Policy, Elsevier, vol. 84(C), pages 44-57.
    3. Benjamin Leard & Virginia McConnell & Yichen Christy Zhou, 2019. "The Effect of Fuel Price Changes on Fleet Demand for New Vehicle Fuel Economy," Journal of Industrial Economics, Wiley Blackwell, vol. 67(1), pages 127-159, March.
    4. Copenhagen Economics, 2010. "Company Car Taxation," Taxation Papers 22, Directorate General Taxation and Customs Union, European Commission.
    5. Vernon, David & Meier, Alan, 2012. "Identification and quantification of principal–agent problems affecting energy efficiency investments and use decisions in the trucking industry," Energy Policy, Elsevier, vol. 49(C), pages 266-273.
    6. Edward Bendit & Amnon Frenkel & Sigal Kaplan, 2011. "Knowledge-workers and the sustainable city: the travel consequences of car-related job-perks," ERSA conference papers ersa11p389, European Regional Science Association.
    7. Rehmatulla, Nishatabbas & Smith, Tristan, 2020. "The impact of split incentives on energy efficiency technology investments in maritime transport," Energy Policy, Elsevier, vol. 147(C).
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    9. von Rosenstiel, Dirk Peters & Heuermann, Daniel F. & Hüsig, Stefan, 2015. "Why has the introduction of natural gas vehicles failed in Germany?—Lessons on the role of market failure in markets for alternative fuel vehicles," Energy Policy, Elsevier, vol. 78(C), pages 91-101.

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    Barrier Energy efficiency Transport;

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