Rebound Effects for Passenger Vehicles in Urban and Rural Regions—An Analysis of Household Survey Data—

Abstract

In Japan, eco-friendly vehicles, such as hybrid vehicles, have been attracting attention as the government promotes them with subsidies and tax reductions. The target vehicles for promotion are selected according to their fuel economy performance, as per a nationwide uniform policy. Previous studies in Japan have observed a rebound effect when improved fuel economy increases the vehicle miles traveled; whereas no study has analyzed the differences in this rebound effect among domestic regions. If our study finds a gap in the rebound effect among regions, then the uniform promotion will be rendered cost-inefficient. Therefore, based on a survey of 790 households, this paper examines whether the rebound effect in urban regions is the same as in rural regions. Our empirical results show that: 1) there is no rebound effect in urban regions and, 2) the rebound effect is approximately 38 percent in rural regions. These findings suggest that the cost-effectiveness of the promotion in rural regions is less than that in urban regions. Thus, the government needs to set different subsidies for rural and urban regions, and promote the use of a public transport system in rural regions.