The Direct Rebound Effect of Improving the Efficiency of Passenger Cars on Gasoline Consumption in Iran

In addition to intensified nonoptimal consumption, the accelerated rise of fuel consumption in the transportation sector is also followed by other hazards in domains such as the environment and national energy security and supply. Therefore, policymakers are particularly interested in improving the productivity of energy consumption with the intention of fuel saving. Such an approach, however, is faced with the rebounded effect in reality, and its positive impacts on reducing energy consumption are counteracted to a large extent.Aiming to estimate the direct rebound effect of improving gasoline consumption efficiency among urban households in four classes of consumption (less than 60 L, 60 to 80 L, 80 to 120 L, and more than 120 L) from 2017 to 2020, the present study applies the almost ideal demand system (AIDS) model and the seemingly unrelated regression (SUR) method.The results indicate that the direct rebound effect of improving gasoline consumption efficiency in four classes of consumption, i.e., less than 60 L, 60 to 80 L, 80 to 120 L, and more than 120 L is 0.73, 0.94, 0.63, and 0.47, respectively. These findings imply that the higher the non-rationed gasoline consumption, the more the saving. In fact, the gasoline pricing mechanism, which has been subject to ongoing criticism, is a significant factor in the extent of the rebound effect, and further amendments are required in this regard.