Analysis of Joint Household Decisions about Car and Motorbike Ownership and use in Taiwan

Abstract

Decisions about automobile ownership and use have been the subject of several investigations over the past few decades. However, decisions about car and motorbike ownership and use have not been sufficiently explored. It is important and useful for researchers and government officials in Taiwan to consider joint household decisions about car and motorbike ownership because many motorbikes are used in Taiwan. Therefore, both cars and motorbikes are considered in this study on the basis of microeconomic consumer behavior theory, in which fixed and variable costs are the two main components of budget restriction. A household is assumed to maximize its utility with three parameters: annual kilometers traveled by car, annual kilometers traveled by motorbike, and annual volume of all other goods and services (in monetary units). Probabilities of car and motorbike ownership are derived and calculated from demand functions and indirect utilities. Different scenarios are modeled to investigate the impact of changes in variable and fixed costs of car and motorbike, income, and combinations of these parameters on car and motorbike ownership and use.