Cristian Huse's research

Working Papers  

Salience and Policy Instruments: Evidence from the Auto Market
with Nikita Koptyug
We take advantage of a unique institutional setting which allows consumers to separately value the fuel tax and the vehicle tax (road tax). We estimate a consumer-level structural model of vehicle choice using revealed preference data and controlling for heterogeneity at the micro level. We find that consumers undervalue both policy instruments, but undervaluation of the latter is substantially more severe. We examine potential explanations and document that behavioral explanations, in particular salience of the policy instruments, lie at the root of our findings; for a number of the salient versions of vehicle tax and fuel costs we construct, we cannot reject the null hypothesis of their correct valuation. This also holds when using different measures of news and online search activity as proxies for salience. The results call for complementary policy instruments to restore market efficiency and for measures to make them more salient to consumers.
-- paper
Version: May 2018

Consumer Response to Energy Label Policies: Evidence from the Brazilian Energy Label Program
with Claudio Lucinda and André Ribeiro
We examine the effects of the PBE program, which made the adoption of energy labels mandatory in the Brazilian refrigerator market. Using data from a nationally representative sample of households, we estimate a structural model of appliance choice. We document a modest increase in the valuation of energy costs and reject the equality of pre- and post-PBE valuation distributions as well as the null of their correct valuation, a finding consistent with the existence of an energy efficiency gap. Our policy simulation documents little product switching and substantial heterogeneity in responses. In particular, households aware of the energy label attain improved energy consumption and energy efficiency, the twin targets of PBE. Cognition and attentiveness enhance the effect of the program among informed households, whereas high-income, uninformed, households switch to refrigerators which are more efficient yet more energy-consuming. Increasing information about the label as well as its design are among the ways one can improve the outcomes of the program.
-- paper
Version: March 2018

Kill Two Birds with One Stone? Environmental Policy Design with Multiple Targets in the Swedish Car Market
with Claudio Lucinda
We perform an ex ante analysis of the effects of environmental policies on the attainment of EU-mandated targets of CO2 emissions and the renewable fuel standard. To do so, we estimate a structural model for the Swedish new vehicle market allowing for consumer heterogeneity and endogenous product characteristics to model the responses of carmakers. Policy simulations suggest that attaining the EU targets using only demand-based policy instruments such as a rebate is not feasible. Thus, policymakers need to implement additional instruments in order to incentivize the introduction of more fuel efficient models in the new vehicle market.
LyX Document -- coming soon! (please email if interested in slides or draft)

The Impact of Incentives and Information on the Energy Paradox: Evidence from Household Data
with Claudio Lucinda and Andre Ribeiro
We use revealed preference data from a nationally representative survey carried out in Brazil to examine how households value investments in energy efficiency when they purchase household appliances. We use household-level data to estimate a structural model of appliance purchase, i.e. the extensive margin of adjustment in energy consumption, accounting for household heterogeneity in prices and in the valuation of operating costs of the appliances. Further, we investigate how valuation is affected by a temporary rationing program and the mandatory introduction of energy labels. We find that consumers generally undervalue energy efficiency; the exception is for consumers facing a binding quota during the rationing program, for which one cannot reject the null hypothesis of correct valuation of energy efficiency. Interestingly, not only do valuation levels revert to pre-crisis levels, but they decrease even further once energy labels become mandatory. The findings suggest that incentives have a stronger effect than information and the dominance of standards over taxes to
shape consumer behavior.
-- coming soon! (please email if interested in slides or draft)

Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy
--Winner of the Public Utility Research Prize for the best paper in regulatory economics at the International Industrial Organization Conference (IIOC)
-- new version coming soon!


Quantifying The Effects of Natural Hedging -- An Examination of US Production for BMW and Porsche
with Richard Friberg  
-- paper
Version: July 2014

Estimating the 'Coordinated Effects' of Mergers
with Peter J. Davis

-- paper
Version: January 2010


 Journal Publications  

(2018): Fuel Choice and Fuel Demand Elasticities in Markets with Flex-fuel Vehicles
Nature Energy
The purchase of multi-fuel vehicles has been incentivized by policies across the globe. As such vehicles are able to operate on more than one source of energy, they introduce fuel (or energy) choice as one additional dimension consumers decide about. Since fuels differ in terms of carbon emissions, this choice has environmental effects. Using twelve years of monthly Swedish data, here I show that the majority of multi-fuel vehicle drivers purchase petrol when it is priced at parity with ethanol. Through policy simulations, I document that fossil fuel taxes have limited success in making drivers switch to alternative fuels, and can generate economic distortions. The findings question the cost-effectiveness of programmes incentivizing the purchase of multi-fuel vehicles that ignore the fuel choice dimension, and highlight the importance of accounting for fuel choice in the analysis of public policy and emerging technologies.
-- paper

(2017): Bailing Out on the Car That Wasn't Bailed Out: Explaining Consumer Reactions to Financial Distress
with Nikita Koptyug
Journal of Economics and Management Strategy 26, 337-374.
-- paper

(2014): The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish "Green Car" Rebate
with Claudio Lucinda
Economic Journal 124, F393-419 (lead article)
--Winner of the Haralambos Simeonidis Prize for the best paper published by a Brazilian economist in the previous 2 years
-- paper

(2013): Build It, But Will They Come? Evidence from Consumer Choice Between Gasoline and Sugarcane Ethanol
with Alberto Salvo

Journal of Environmental Economics and Management 66, 251-279.
-- paper  slides

   (2012): Does Product Differentiation Soften Price Reactions to Entry? Evidence from the Airline Industry
with Alessandro V. M. Oliveira
Journal of Transport Economics and Policy 46 (2), 189-204.

   (2011): Is Arbitrage Tying the Price of Ethanol to that of Gasoline? Evidence of the Uptake of Flexible-Fuel Technology
with Alberto Salvo

Energy Journal 32 (3), 119-148.
-- paper  online appendix

 (2011): Term Structure Modelling with Observable State Variables
Journal of Banking and Finance 35 (12) 3240-3252.
   (2009): Localized competitive advantage and price reactions to entry: Full-service vs. low-cost airlines in recently liberalized emerging markets
with Alessandro V. M. Oliveira
Transportation Research E: Logistics and Transportation Review, Vol 45 (2), 307-320.

(2007): Investigating Business Traveller Heterogeneity: Low-Cost vs Full-Service Airline Users ?
with Fabio Evangelho
Transportation Research E: Logistics and Transportation Review, Vol 43 (3), 259-268.

(2005): Market Entry of a Low-Cost Airline and Impacts on the Brazilian Business Travellers
with Fabio Evangelho and Alexandre Linhares
Journal of Air Transport Management Volume 11 (2), 99-105.
Book Chapters  
  Estimation and Identification of Demand and Supply
with Alberto Salvo, in Portuguese

In: Quantitative Methods Applied to Antitrust and Regulation, edited by Eduardo P. S. Fiuza and Ronaldo Seroa da Motta (Instituto de Pesquisa Econômica Aplicada, IPEA).
Brasília: SDE (Ministry of Justice), 2006.

(c) Cristian Huse 2008-2018