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15 J. Consumer Pol'y 1 (1992)

handle is hein.journals/jrncpy15 and id is 1 raw text is: Rachel Dardis and Horacio Soberon-Ferrer The Demand for Small Cars in the United States: Implications for Energy Conservation Strategies ABSTRACT. The purpose of this paper was to investigate the impact of household characteristics and preferences for Japanese cars on the demand for small cars in the United States. Two stage probit analysis was used to examine the impact of various explanatory variables on the purchase decision. The results indicated that preferences for Japanese cars, income, price and several household characteristics had a significant impact on the probability of purchasing a small car. The results of this study provide support for freer trade in automobiles and higher gasoline taxes as energy conservation strategies. The need for energy conservation in the United States in recent years has increased due to environmental and oil dependency concerns. Fossil fuel burning causes environmental pollution and ozone depletion and may play a major role in global warming while oil imports account for a significant portion of the U.S. trade deficit. Individual consumers could alleviate some of these problems by changing their consumption patterns including their use of automo- biles. This occurred after the energy crisis of 1973 when the demand for small cars increased due to increases in the price of gasoline and decreases in real income. Congress also introduced corporate average fuel economy standards (CAFE) in 1975 which became effective in 1978. These standards set a fleet average of 18 miles per gallon for 1978 models with increases each year culminating in 27.5 miles per gallon for 1985 models. As a result of these developments the market share of mid-sized and large cars declined from 58 percent in 1978 to 38 percent in 1981 while the average fuel efficiency of U.S. cars increased from 20 miles per gallon in 1979 to 25 miles per gallon in 1981 (Crandall, Gruenspecht, Keeler, & Lave, 1986, p. 122; Kee, 1991). The situation then changed due to declines in gasoline prices and the belief that the energy crisis had passed.t In 1985 Robert Crandall stated that the societal case for increasing energy con- Journal of Consumer Policy 15: 1-20, 1992. © 1992 Kluwer Academic Publishers. Printed in the Netherlands.

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