The role of regulation, fiscal incentives and changes in tastes in the diffusion of unleaded petrol

This paper analyses the diffusion of unleaded petrol in the UK. Changes in the market share of unleaded fuel are the result of changes in the composit ion of the car stork and changes in the choice of fuel given the car stock We find that fuel type choices have been mainly driven by changes in tastes and learning as opposed to changes in relative prices induced by fiscal in centives. However car stock composition effects dominate the diffusion proc ess and we find that through this route regulatory changes have made major contributions to changes in the market share of unleaded fuel.