The flexi-fuel car: consumer value of fuel choice flexibility (135)
Project leader: Niclas Krüger
Start date: 2010-07-01
End date: 2010-12-31
This project examines the value of fuel choice flexibility derived from a flexi-fuel engine. We use estimates for the stochastic properties of fuel prices from empirical time series analysis as input in Monte-Carlo simulation, in order to value the option to switch fuel. In addition, we estimate the expected environmental impact if consumers are purely motivated by monetary incentives. Finally, we plan to estimate the effect of tax changes on option value and the environment. The methodology used in this project can be applied to other propulsion technologies as well, which combine different technologies in order to overcome uncertainty and network effects. On a more general level, the planned project contribution is to highlight the relation between flexibility in technical design and economic evaluation. Last but not least, this project aims at demonstrating the importance of uncertainty and the value of flexibility for analysis of transport policy.