China is experiencing rapid economic growth and, along with it, rapid growth in vehicle ownership. The rapid growth in vehicle ownership and vehicle usage is linked to increasing global warming, emissions, air pollution, and other problems. Observing data from sales, prices, and vehicle characteristics, the researcher has created an econometric model to measure supply and demand within the Chinese vehicle market. The model can simulate how introduction of new alternative vehicles and counterfactual government policies impact alternative vehicle market share and welfare. In addition, the researcher has created an econometric model for predicting future automobile company decisions.
The model of the demand and cost in the Chinese automobile market will be significant for industry, particularly car manufacturers interested in better targeting cars, including alternative vehicles, for the Chinese market. The estimates of the factors that affect demand and supply in the Chinese automobile market are significant for policy-makers interested in developing incentive policies to increase market penetration of alternative vehicles with potential environmental and climate benefits.