Date of Award

8-2008

Level of Access

Campus-Only Thesis

Degree Name

Master of Science (MS)

Department

Resource Economics and Policy

Advisor

Mario Teisl

Second Committee Member

Jonathan Rubin

Third Committee Member

Mary Davis

Abstract

The growth in the light duty vehicle (LDV) market has been substantially driven by the increase in the market share of light-duty trucks (LDTs) which include sport utility vehicles (SUVs), vans, and pickup trucks. The LDV market offers to consumers over one hundred combinations of 100 vehicle makes and models of different shapes, sizes, brands, technologies, interior fabrics, color, and optional amenities; with environmental attributes being just one factor to consider. Consumers may find functionality, comfort, and safety more important than environmental attributes when purchasing vehicles. From an environmental viewpoint, environmental harm continues to increase due to growing vehicle consumption despite technological improvements (i.e. cylinder deactivation design) and cleaner tailpipe standards (ExxonMobil, 2006); making transportation the second major contributing end-sector of greenhouse gases (U.S. EPA, 2008). From a policy perspective, marketing efforts could be directed at changing inefficient and environmentally damaging consumption habits. Environmental organizations and public institutions have engaged in voluntary eco-information programs to encourage green consumption such as the ecomarketing campaigns conducted by the Department of Resource Economics and Policy (now School of Economics) at the University of Maine in collaboration with the Maine Department of Environmental Protection, the Maine Autodealers Association and the Natural Resources Council of Maine in 2005. While the program has been instrumental at addressing the potential impact of eco-information programs on vehicles, the hypothetical nature of the data provides little information on the actual impact of eco-information programs in the market. In this thesis, we investigated whether eco-marketing campaigns have been an effective policy variable in improving the likelihood of ownership of vehicles with higher environmental performance using the market data. We also attempted to examine the effects of demographics and gas prices on the variability of vehicle consumption in Maine. We used a comprehensive database containing 64,001 vehicle registration records containing vehicle and environmental attributes, socio-demographics, and gas price information. We hypothesized that eco-marketing campaigns increase the likelihood of owning LDVs with higher environmental performance in Maine. However, our results from binary logistics regressions suggest that eco-marketing campaigns do not seem to have a positive effect on consumers of environmentally-friendly passenger cars and pick up trucks. Moreover, results suggest that eco-marketing campaigns do not appear to have had a statistically significant effect on the likelihood of owning SUVs with higher environmental performance. While we do not have sufficient information to validate our findings, our empirical results could be explained by the fact that the individuals exposed to the ecomarketing campaign were less likely to think that their currently lifestyles have an impact on the environment; implying that, the marketing campaign may have led the individuals to see eco-purchase as less important. We also found that households have differing reactions on the various pollutants associated to a vehicle in their purchase decision in some vehicle classes. Although we lack a comprehensive demographic profile of vehicle buyers, policy efforts should be directed at informing the general public of the equally-important nature of the two environmental attributes, air pollution score and the greenhouse gas score when purchasing a vehicle Due to data limitations, no clear implication can be drawn regarding the effectiveness of the eco-marketing campaigns. However, the general conclusion is that the ecocomposition of the Light-duty vehicle market is improving over time because of the increased number of vehicle models with higher environmental performance that are available in the market today.

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