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Feebates – Glossary

DEVELOPMENT OF OPTIONS FOR A VEHICLE FEEBATE IN CANADA

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GLOSSARY

Cap - Maximum level of fee to be paid, regardless of fuel consumption rating. Consumer Surplus - The difference between what is person is willing to pay for a commodity and the amount he/she actually is required to pay. Deadband - Band of fuel consumption rating, where there is no fee or rebate. Elasticity - In economic terms, elasticity is the ratio of the incremental percentage change in price with respect to an incremental percentage change in quantity demanded. Generally, elasticity is expressed with respect to a 1% increase in price and a corresponding decrease in quantity demanded. Fuel Efficiency - The extent to which the various vehicle components maximize the conversion of fuel to kinetic energy. Can be expressed as fuel economy or fuel consumption, which are inversely related: Fuel Consumption - The amount of fuel needed to cover as specific distance (e.g. litres per 100km) - used by convention in Canada. Fuel Economy - The distance covered with a specific amount of fuel (e.g. miles per gallon) - used by convention in the U.S. Gaming - Artificially changing behaviour to manipulate program rules so that some competitive advantage is gained (e.g. to move vehicles into a different class or to influence the selection of the pivot point). Light-duty vehicle - Cars and light trucks. Multinomial Logit Model - Type of mathematical model used to predict consumer choices that are independent. The model is based on logarithms of probabilities, expressed as the odds of a set of choices. Pivot Point - The level of fuel consumption below which results in a rebate and above which results in a fee, and that in combination with other feebate design parameters, can be selected to achieve revenue-neutrality. Plateau - Band of fuel consumption rating, where the fee or rebate remains unchanged. Rebound Effect - The inducement to drive more because the cost of driving has come down due to fuel savings. Revenue Neutrality - From a government revenue perspective, total fees equal total rebates and thus government revenue remains unchanged. Vehicle Arbitrage - The import/export of vehicles to take advantage of different prices in different jurisdictions. In effect, price differentials in the markets will induce a movement in sales to the lower price market. « Previous — Contents — Next »