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The Impact of the Fuel Price Policy on the Demand for Diesel Passenger Cars in Korean Cities

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  • Jae-Hong Kim
  • Seungil Lee
  • John Preston

Abstract

This study forecasts the impact of fuel price policy on the diesel car demand after the permission of domestic sales, using a conjoint analysis based on the stated preference survey from 500 respondents in Seoul and 324 respondents in Ulsan, Korea. The estimation results show that the fuel price elasticity is -0.631 and -0.645 for diesel cars in Seoul and Ulsan, respectively and the elasticity of purchase price are -1.332 and -1.058 for diesel cars in Seoul and Ulsan, respectively. The estimates of the diesel price elasticity indicate that the government planned fuel policy increasing diesel price from the current 70% to 85% of petrol price will decrease the demand for diesel cars by 13.8% to 23.4% when the petrol price is kept at the current price. The estimate of the purchase price elasticity denotes that the obligation of pollutantreducing equipment on diesel cars (about 10% of the sales price) will reduce the demand for diesel cars by 13.3% to 14.7%.

Suggested Citation

  • Jae-Hong Kim & Seungil Lee & John Preston, 2006. "The Impact of the Fuel Price Policy on the Demand for Diesel Passenger Cars in Korean Cities," International Review of Public Administration, Taylor & Francis Journals, vol. 10(2), pages 61-73, January.
    • Handle: RePEc:taf:rrpaxx:v:10:y:2006:i:2:p:61-73
    DOI: 10.1080/12294659.2006.10805069
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    References listed on IDEAS

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    1. Daniel J. Graham & Stephen Glaister, 2002. "The Demand for Automobile Fuel: A Survey of Elasticities," Journal of Transport Economics and Policy, University of Bath, vol. 36(1), pages 1-25, January.
    2. Bruce Walker & Alex Marsh & Mark Wardman & Pat Niner, 2002. "Modelling Tenants' Choices in the Public Rented Sector: A Stated Preference Approach," Urban Studies, Urban Studies Journal Limited, vol. 39(4), pages 665-688, April.
    3. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, September.
    4. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, September.
    5. Murphy, James J. & Stevens, Thomas H., 2004. "Contingent Valuation, Hypothetical Bias, and Experimental Economics," Agricultural and Resource Economics Review, Cambridge University Press, vol. 33(2), pages 182-192, October.
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    Cited by:

    1. Lee, Jongsu & Cho, Youngsang, 2009. "Demand forecasting of diesel passenger car considering consumer preference and government regulation in South Korea," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 420-429, May.
    2. Tovar, Miguel A., 2011. "An integral evaluation of dieselisation policies for households' cars," Energy Policy, Elsevier, vol. 39(9), pages 5228-5242, September.

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