Car Ownership in Relation to Income Distribution and Consumers' Spending Decisions

This paper proposes a formal model of per capita private car ownership based on very simple and general assumptions on income distribution and consumers' spending decisions. The author justifies a theoretical S-shaped curve describing changes in ownership as a function of average per capita income, income's dispersion, and the 'cost/utility' ratio of owning a car. He applies the model to a panel of sixty-four countries and explains past variations in their ownership rates. Then, projections are performed to the year 2030. These suggest that important technical and sociological evolutions will be needed to 'meet the challenges of sustainability'. © 2010 LSE and the University of Bath