| dc.description.abstract | In recent years, domestic gasoline prices by the impact of international oil prices continue to rise, leading to Taiwan’’s domestic automobile sales seriously decline. But the prices of cars are no obvious increase in recent years. The purpose of this paper is to investigate the relation of gasoline prices and the demand of Taiwan’’s automobiles. We consider whether consumers prefer to buy high fuel efficient cars and firms also increase automobile fuel efficiency standards under the high gasoline prices.
This study uses the market share model which the discrete choice model developed as well as the survival probability model to estimate the impact of gasoline prices on the demand of domestic cars. Our data consists of 584 car models including sales, related characteristics and gasoline prices from 1997 to 2008.
Our empirical results show three major conclusions: First, gasoline prices will cause domestic car sales fell, but the sales of high fuel efficient cars will relatively increase. In addition, the elasticity of automobile market shares with fuel consumption is -7.05. The second is that the sales of Kuozui, Taiwan Honda, Yulon, China Motor Corporation, MAZDA, Sayang, Ford, small car and low-price cars have increased under high gasoline prices. The third is that high fuel efficient vehicles survive longer than low fuel efficient vehicles in the market.
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