Consumer Preferences for Fuel Choice – A Study of Swedish Flexi-fuel Drivers:

Abstract: Our study investigates the behavior of flexi-fuel vehicle (FFV) drivers in the choice between ethanol and gasoline, in order to understand if preferences are driven by other factors than the cost of fuelling. Furthermore, we investigate if individual characteristics affect preferences. To address these questions, we conduct a survey with FFV drivers at gas stations in the Stockholm area, and use ready market-level data for comparative purposes. Applying the probit regression model to our data, we find that fuel preference is not only price-driven, though both gasoline and ethanol prices have substantial effect on ethanol choice – the former significantly more than the latter. The impact of relative prices is however inconclusive. Our field study reveals that some respondents choose ethanol for its perceived environmental advantages over gasoline, even if this choice incurs a financial loss. Besides price and environmental concern, autonomy preference and habit are identified as main reasons behind fuel choice, and we identify specific characteristics of each of these four decision-making groups.