Vehicle choices, miles driven, and pollution policies

Ye Feng, Don Fullerton, Li Gan

Research output: Contribution to journalArticlepeer-review


Mobile sources contribute large percentages of each pollutant, but technology is not yet available to measure and tax emissions from each vehicle. We build a behavioral model of household choices about vehicles and miles traveled. The ideal-but-unavailable emissions tax would encourage drivers to abate emissions through many behaviors, some of which involve market transactions that can be observed for feasible market incentives (such as a gas tax, subsidy to new cars, or tax by vehicle type). Our model can calculate behavioral effects of each such price and thus calculate car choices, miles, and emissions. A nested logit structure is used to model discrete choices among different vehicle bundles. We also consider continuous choices of miles driven and the age of each vehicle. We propose a consistent estimation method for both discrete and continuous demands in one step, to capture the interactive effects of simultaneous decisions. Results are compared with those of the traditional sequential estimation procedure.

Original languageEnglish (US)
Pages (from-to)4-29
Number of pages26
JournalJournal of Regulatory Economics
Issue number1
StatePublished - Aug 2013


  • Continuous demands
  • Discrete choices
  • Environmental incentives

ASJC Scopus subject areas

  • Economics and Econometrics


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