Explaining the Adoption of Diesel Fuel Passenger Cars in Europe

Joshua Linn

March 2014

Joshua Linn, March 2014

Compared with gasoline engines, diesel fuel engines significantly reduce fuel consumption and greenhouse gas emissions from passenger vehicles, but they emit more nitrogen oxides and other pollutants. Across countries, the market share of diesel fuel engines in passenger vehicles varies from close to zero to more than 80 percent. Using a structural model of vehicle markets in seven European countries, I show that vehicle taxes and willingness to pay for fuel costs, rather than fuel prices or supply, explain adoption. The model is used to compare the environmental implications of fuel taxes and carbon dioxide emissions rate standards.

JEL Codes: L62, Q4, Q5
Keywords: Vehicle demand estimation, demand for fuel economy and performance, fuel taxes, vehicle taxes, carbon dioxide emissions rates

For Associates Only

As a benefit to our Associates, the latest Working Papers are embargoed for a period of up to six months before becoming accessible to the public. If you are interested in becoming an Associate or learning more about the benefits of sponsorship, please click here, or email us at

If you are a CEEPR Associate or CEEPR staff member, please visit the login page here: