Feebates – Glossary
DEVELOPMENT OF OPTIONS FOR A VEHICLE FEEBATE IN CANADA
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 »
© 2013