The Premium and Other Sensible Nonsense
The PERCOLATOR - the PERC Blog
Property and Environment Research Center
As this working paper by Steven and Alison Sexton explains, there is a substantial, and important, price premium that Toyota Prius buyers are willing to pay to drive a Prius. They are clearly buying something other than mere transportation. To some—indeed many—this waste of resources seems silly. To others it seems wonderful. The comparable gasoline-powered Toyota costs several thousand dollars less. Why would anybody do this? After all, the Prius buyer could purchase the equivalent gas Toyota and use the savings to donate to an environmental organization, or to pay the local boy or girl scouts to pick up litter? Or donate the money to some climate change cause?
McCormick, Robert E., "The Premium and Other Sensible Nonsense" (2014). Publications. 7.