Cost-Effective Policies to Reduce Vehicle Emissions
AbstractThis paper uses an estimated demand system that accounts for heterogeneity to calculate and compare the lost consumer surplus from a higher tax on gasoline, a tax on distance, or a subsidy for buying a newer car. We introduce a view of cost-effectiveness that compares policies instead of technologies. Each tax might induce some consumers to drive less, some to switch from two vehicles to one, and some to buy a car instead of an SUV. Our model captures these behaviors. For each rate of tax, we simulate the changes in all such choices and how the new choices affect emissions. We also calculate the equivalent variation and subtract tax revenue to get deadweight loss. Finally, we take the added deadweight loss over the additional abatement as the social marginal cost of abatement, and we plot this curve for several different tax policies.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 95 (2005)
Issue (Month): 2 (May)
Other versions of this item:
- Don Fullerton & Li Gan, 2005. "Cost-Effective Policies to Reduce Vehicle Emissions," NBER Working Papers 11174, National Bureau of Economic Research, Inc.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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NBER Working Papers
7774, National Bureau of Economic Research, Inc.
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