Demand Estimation Of Automobile Market In Shanghai, China

Abstract

Dramatic and rapid increase in vehicle ownership has become a hallmark of economic growth in China. Since 2009, China has surpassed the United States and became the world largest automobile market. The unprecedented expansion in vehicle ownership, especially in urban areas, has imposed significant challenges to transportation infrastructure, environment and energy security. The significant evolution of vehicle ownership has drawn huge interest of researchers and various methodologies have been applied to study the demand evolution of the automobile market in China, which provide a foundation for further welfare analysis and policy implications. This thesis uses market-level vehicle sales data from 2008 to 2012 in Shanghai, China, together with detailed data on characteristics of the 1,916 different vehicle models. The models analyzed are Logit Ordinary Least Squares (Logit-OLS), Logit Two-Stage Least Squares (Logit-2SLS) and the random-coefficient discrete-choice model of demand [Berry, 1994; Berry et al., 1995]. Results from these three models are compared and discussed.