The impact of the fuel price policy on the demand for diesel passenger cars in korean cities

Kim, Jae Hong, Lee, Seungil and Preston, John (2006) The impact of the fuel price policy on the demand for diesel passenger cars in korean cities. International Review of Public Administration, 10 (2), 61-73. (doi:10.1080/12294659.2006.10805069).

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%.

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Contributors

Author: John Preston

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