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Market-Based Policies for Green Motoring in Canada

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  • Werner Antweiler
  • Sumeet Gulati
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    Abstract

    The most effective policy to address environmental externalities from vehicular fuel use is an appropriate fuel tax. Instead of raising fuel taxes, Canada's provincial and federal governments prefer to subsidize the purchase of fuel-efficient vehicles and the accelerated retirement of old vehicles. Are these programs effective? Can they be improved? We argue that subsidies for hybrids and electric vehicles are not cost-effective and instead recommend building on Canada's brief and modest experience with ”feebates." While British Columbia's pioneering accelerated vehicle retirement program is cost-effective, its success rests significantly on inducing participants to switch from personal vehicles to alternative transportation modes. Policy refinements will be needed to adapt the lessons learnt from this program to less favourable conditions elsewhere in Canada.

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    Bibliographic Info

    Article provided by University of Toronto Press in its journal Canadian Public Policy.

    Volume (Year): 39 (2013)
    Issue (Month): s2 (August)
    Pages: 81-94

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    Handle: RePEc:cpp:issued:v:39:y:2013:i:s2:p:81-94

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    1. Diamond, David, 2009. "The impact of government incentives for hybrid-electric vehicles: Evidence from US states," Energy Policy, Elsevier, vol. 37(3), pages 972-983, March.
    2. Soren T. Anderson & Ian W. H. Parry & James M. Sallee & Carolyn Fischer, 2011. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 89-108, Winter.
    3. Arie Beresteanu & Shanjun Li, 2011. "Gasoline Prices, Government Support, And The Demand For Hybrid Vehicles In The United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 161-182, 02.
    4. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
    5. Krupnick, Alan & McConnell, Virginia & Stoessell, Terrell & Cannon, Matthew & Batz, Michael, 2000. "Cost-Effective NOx Control in the Eastern United States," Discussion Papers dp-00-18, Resources For the Future.
    6. Robert W. Hahn, 1995. "An Economic Analysis of Scrappage," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 222-242, Summer.
    7. Anna Alberini & Winston Harrington & Virginia McConnell, 1995. "Determinants of Participation in Accelerated Vehicle-Retirement Programs," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 93-112, Spring.
    8. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, vol. 33(6), pages 757-775, April.
    9. Fischer, Carolyn, 2008. "Comparing flexibility mechanisms for fuel economy standards," Energy Policy, Elsevier, vol. 36(8), pages 3106-3114, August.
    10. Chandra, Ambarish & Gulati, Sumeet & Kandlikar, Milind, 2010. "Green drivers or free riders? An analysis of tax rebates for hybrid vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 78-93, September.
    11. Ryan Sandler, 2012. "Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 253-81, November.
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