Consumers' choice of vehicle parameters and their impact on environment in relation to gasoline price increase in Bahrain

In response to Government's decision to lift some subsidies on gasoline in the Kingdom of Bahrain in 2016 and subsequently, in 2018, the current study examines the impact of increase in gasoline price on consumers' choice of private vehicles parameters. The results reveal a significant decrease in both vehicle weight and engine displacement, and a significant increase in fuel efficiency with the increase in gasoline price. However, as expected, the percent change in the values of vehicle parameters is less than the percent change in fuel price indicating inelastic demand of vehicle parameters with respect to fuel price. Application of dummy variable regression model further reveals that fuel price and vehicle parameters have significant impact on CO
2
emissions and thus, on the environment.