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Consumer value of f...
Consumer value of fuel choice flexibility : a case study of the flex-fuel car in Sweden
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- Krüger, Niclas A. (author)
- Statens väg- och transportforskningsinstitut,KTH,Centrum för transportstudier, CTS,Centre of Transport Studies, Stockholm, Sweden; Swedish National Road and Transport Research Institute, Linköping, Sweden; TRENoP, Royal Institute of Technology, Stockholm, Sweden,TRENoP, Royal Institute of Technology, Stockholm, Sweden,Transportekonomi Stockholm, TEK-S
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- Haglund, A. (author)
- Karlstads universitet,Avdelningen för nationalekonomi och statistik
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(creator_code:org_t)
- 2013-06-26
- 2013
- English.
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In: European Transport Research Review. - Heidelberg, Germany : Springer Science and Business Media LLC. - 1867-0717 .- 1866-8887. ; 5:4, s. 207-215
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Abstract
Subject headings
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- Purpose: This paper examines the value of fuel choice flexibility derived from a flex-fuel engine. Method: Based on the stochastic properties of fuel prices, we use Monte-Carlo simulation in order to value the option to switch fuel. Results: Our findings indicate a considerable value of fuel choice flexibility, ranging between 7,500 and 37,800 SEK, depending on the underlying stochastic process we assume that fuel prices follow. This can be compared to the state subsidy of 10,000 SEK provided until recently for buying a flex-fuel car. Conclusion: Compared to an environmentally friendly pure ethanol strategy, the switching strategy is considerably less costly, about 2,000-19,000 SEK depending on the assumed underlying stochastic process, a fact that is important to take into consideration with environmental policy.
Subject headings
- TEKNIK OCH TEKNOLOGIER -- Maskinteknik (hsv//swe)
- ENGINEERING AND TECHNOLOGY -- Mechanical Engineering (hsv//eng)
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business (hsv//eng)
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Keyword
- Flex-fuel car
- Geometric Brownian motion
- Mean-reversion
- Real option analysis
- Environmental policy
- Flex-fuel
- Monte-Carlo simulations
- Stochastic properties
- Switching strategies
- Intelligent systems
- Random processes
- Fuels
- 02 Road: Economics
- Economics
Publication and Content Type
- ref (subject category)
- art (subject category)
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