8 December 2021

The transition of the car fleet to zero emission vehicles


Transitioning the car fleet to zero emission vehicles will take decades and will require a series of large tax reforms. Quantitative policy analysis tools are needed to guide policy. Mogens Fosgerau and the team around him has been granted 11.8 Mio DKK from the Independent Research Foundation Denmark to deliver the quantitative analysis

Decorative image of green car
Stock photo from Colourbox

The car market is challenging to model. The main issues are that the choice set is very large, there is lots of heterogeneity and very complex substitution patterns. Cars are durable goods, used cars are traded in a secondary market. Households substitute usage between cars and may use zero emission vehicles for different purposes, such as shorter trips. Car prices are endogenous: producers set prices strategically in response to the incentives provided by the tax regime.

The GREENCAR research team contributes at the research frontier of empirical industrial organization and discrete choice econometrics with models and methods for high-dimensional and complex settings. The team develops models that can be used to guide policy in the green transition.

The local team consists of Nikolaj Nielsen, Maria Juul Hansen, Anders Munk-Nielsen, and Bertel Schjerning. You can follow their work on the project's web page.