In this paper, a model for the joint household decision on car ownership and car use is developed, estimated, and applied in simulation. It is a new extension of a previous model that excluded two-vehicle households. The model is explicitly based on the microeconomic theory of consumer behaviour. A household is assumed to maximise a utility function with three goods: annual kilometrage in the first car, annual kilometrage in the second car, and other goods. The specific functions used are all non-linear. In estimation (done by maximising a single likelihood function) these non-linear forms themselves are used instead of linear approximations. Estimates on data sets for The Netherlands, Israel, and Norway are presented. Simulation results involve the impact of changes in variable car costs, fixed car costs, income, and combination of these on car ownership and use. (A)
Abstract