The 'neighbor effect': Simulating dynamics in consumer preferences for new vehicle technologies

Understanding consumer behaviour is essential in designing policies that efficiently increase the uptake of clean technologies over the long-run. Expert opinion or qualitative market analyses have tended to be the sources of this information. However, greater scrutiny on governments increasingly demands the use of reliable and credible evidence to support policy decisions. While discrete choice research and modeling techniques have been applied to estimate consumer preferences for technologies, these methods often assume static preferences. This study builds on the application of discrete choice research and modeling to capture dynamics in consumer preferences. We estimate Canadians' preferences for new vehicle technologies under different market assumptions, using responses from two national surveys focused on hybrid gas-electric vehicles and hydrogen fuel cell vehicles. The results support the relevance of a range of vehicle attributes beyond the purchase price in shaping consumer preferences towards clean vehicle technologies. They also corroborate our hypothesis that the degree of market penetration of clean vehicle technologies is an influence on people's preferences ('the neighbor effect). Finally, our results provide behavioural. parameters for the energy-economy model CIMS, which we use here to show the importance of including consumer preference dynamics when setting policies to encourage the uptake of clean technologies. (C) 2008 Elsevier B.V. All rights reserved.