Consumer purchases of energy-efficient cars: behavioural implications for policy

The paper examines the Spanish light-duty vehicle market to determine how consumer behaviour—specifically whether they make 'absolute' or 'relative' decisions—influences the effectiveness of energy efficiency labels and financial incentives. Using the Quantity Based Demand System (QBDS), the authors calculate price elasticities of demand to show that the sensitivity of consumers to price changes varies depending on whether they seek the most efficient car in the entire market or the most efficient car within a specific segment. The study concludes that a mixed labelling scheme may be the most effective way to address diverse consumer behaviours.

• In 2012, 41% of cars sold in Spain were categorized as very efficient (class A), and cars with A and B labels collectively accounted for more than 75% of all sales.
• Spain employs a relative labelling scheme where a car's rating is based on its deviation from the average within its market segment, which can lead to larger, higher-emitting vehicles receiving better ratings than smaller, lower-emitting cars from different segments.
• Under the 'absolute decision' hypothesis—where consumers seek the most efficient car regardless of segment—demand for energy-efficient cars is slightly more elastic than demand for non-efficient cars.
• Under the 'relative decision' hypothesis—where consumers first choose a car segment and then the most efficient model within it—demand for the most efficient cars (class A) is less elastic than demand for non-efficient cars.
• The PIVE (Programa de Incentivos al Vehículo Eficiente) plan in Spain provides subsidies for class A or B cars, electric cars, and alternative fuel vehicles, provided the car price does not exceed €25,000.
• The authors suggest that because consumers may use different decision-making processes, a mixed labelling scheme providing both absolute and relative information may be the most suitable approach.

APA

Galarraga, I., Lucas, J., & Kallbekken, S. (2018). Consumer purchases of energy-efficient cars: behavioural implications for policy. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20180503115018964295435.pdf

Chicago

Galarraga, Ibon, Josu Lucas, and Steffen Kallbekken. Consumer purchases of energy-efficient cars: behavioural implications for policy. Basque Centre for Climate Change, 2018. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20180503115018964295435.pdf.

Wikipedia

{{cite report |last1=Galarraga |first1=Ibon |last2=Lucas |first2=Josu |last3=Kallbekken |first3=Steffen |title=Consumer purchases of energy-efficient cars: behavioural implications for policy |publisher=Basque Centre for Climate Change |date=April 2018 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20180503115018964295435.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{galarraga2018consumer, author = {Galarraga, Ibon and Lucas, Josu and Kallbekken, Steffen}, title = {{Consumer purchases of energy-efficient cars: behavioural implications for policy}}, institution = {Basque Centre for Climate Change}, year = {2018}, month = apr, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/20180503115018964295435.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }