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Economics

29 September 2012

A Comparison between Cars’ preferences in the USA and Europe

After the economic relapse and recent difficult situation on the job market made durable goods like cars to be a well-weighed purchase. When discussing a phenomenon of car Consumption in the USA and Europe several important differences between the goods have to be taken into consideration.

The first apparent distinction between European and American cars is their size. The US manufacturers make automobiles larger and spacious, containing bigger engines. To the contrary, European cars are much smaller consisting of fuel-efficient engines and delicate by design. There are several reasons for this difference. The first cause is the diversity of sizes of the roads in the USA and Europe. While American roads and distances are larger and longer, the necessity for the bigger vehicles is evident. In its own turn, Europe is known for narrower roads and smaller distances between the destinations, which dictate the preference for the smaller sized cars among the consumers. The second reason is the difference of fuel prices in both countries. Recently, the U.S. prices are considered the lowest among developed countries, while the European gas is twice as pricy as the continent is heavily dependent on the imported fuel. “At the margin, consumers equate the price of gasoline (the “internal” cost) with the marginal value of its consumption. In the absence of any externality, the marginal value of the use of a gallon of gas equals its price, and there is no public benefit from reducing the consumption of gasoline.”(Kleit 53) As the prices for gas remain affordable for the American consumers it is more likely for them to choose a large SUV than a small sedan as it can accommodate a big family and to be more comfortable in the long distances. However, European cars are more durable than the American ones, at the same time the U.S. cars are much cheaper. It is also important to notice the overall convenience and better tuning of the U.S. vehicles determined by an ultimate American perception of the cars’ purposes. While the European drivers consider car as a means of transport on the short distances, their American counterparts need a vehicle to be their “second house” as they spend a great deal of their lives in it. To sum it up one can make a conclusion that the main differences of the cars consumption in the USA and Europe are due to the distinction in needs of the consumers, gas prices and the sizes of the roads.

Works Cited

Kleit, Andrew N. “Impacts of Long-Range Increases in the Fuel Economy (CAFE) Standard.” Economic Inquiry, 42.2 (2004): 49-70. Print.