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Green drivers or free riders? An analysis of tax rebates for hybrid vehicles

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  • Chandra, Ambarish
  • Gulati, Sumeet
  • Kandlikar, Milind

Abstract

We estimate the effect of tax rebates offered by Canadian Provinces on the sales of hybrid electric vehicles. We find that these rebates led to a large increase in the market share of hybrid vehicles. In particular, we estimate that 26% of the hybrid vehicles sold during the rebate programs can be attributed to the rebate, and that intermediate cars, intermediate SUVs and some high performance compact cars were crowded out as a result. However, this implies that the rebate programs also subsidized many consumers who would have bought either hybrid vehicles or other fuel-efficient vehicles in any case. Consequently, the average cost of reducing carbon emissions from these programs is estimated to be $195 per tonne.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 60 (2010)
Issue (Month): 2 (September)
Pages: 78-93

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Handle: RePEc:eee:jeeman:v:60:y:2010:i:2:p:78-93

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Web page: http://www.elsevier.com/locate/inca/622870

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Keywords: Hybrid electric vehicles Tax rebate Energy efficiency Carbon policy;

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Citations

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Cited by:
  1. James M. Sallee, 2010. "The Taxation of Fuel Economy," NBER Chapters, National Bureau of Economic Research, Inc, in: Tax Policy and the Economy, Volume 25, pages 1-37 National Bureau of Economic Research, Inc.
  2. Jordi Perdiguero & Juan Luis Jiménez, 2012. "“Policy options for the promotion of electric vehicles: a review”," IREA Working Papers, University of Barcelona, Research Institute of Applied Economics 201208, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.
  3. Thoenes, Stefan & Gores, Timo, 2012. "Attention, Media and Fuel Efficiency," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2012-11, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  4. M. Bočkarjova & P. Rietveld & J.S.A. Knockaert, 2013. "Adoption of Electric Vehicle in the Netherlands – A Stated Choice Experiment," Tinbergen Institute Discussion Papers, Tinbergen Institute 13-100/VIII, Tinbergen Institute.
  5. Rob Aalbers & Henri de Groot & Herman R.J. Vollebergh, 2011. "Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 194, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Huse, Cristian & Lucinda, Claudio, 2013. "The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate," MPRA Paper 48905, University Library of Munich, Germany.
  7. Werner Antweiler & Sumeet Gulati, 2013. "Market-Based Policies for Green Motoring in Canada," Canadian Public Policy, University of Toronto Press, University of Toronto Press, vol. 39(s2), pages 81-94, August.
  8. Corey Allan & Adam B. Jaffe & Isabelle Sin, 2014. "Diffusion of Green Technology: A Survey," Working Papers, Motu Economic and Public Policy Research 14_04, Motu Economic and Public Policy Research.
  9. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
  10. Zhang, Xian & Wang, Ke & Hao, Yu & Fan, Jing-Li & Wei, Yi-Ming, 2013. "The impact of government policy on preference for NEVs: The evidence from China," Energy Policy, Elsevier, Elsevier, vol. 61(C), pages 382-393.
  11. Kyle Kinler & Jeffrey Wagner, 2014. "Greenness versus safety in vehicle footprint selection," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 7(1), pages 35-45, March.
  12. Boomhower, Judson & Davis, Lucas W., 2014. "A credible approach for measuring inframarginal participation in energy efficiency programs," Journal of Public Economics, Elsevier, Elsevier, vol. 113(C), pages 67-79.
  13. Jones, Luke R. & Cherry, Christopher R. & Vu, Tuan A. & Nguyen, Quang N., 2013. "The effect of incentives and technology on the adoption of electric motorcycles: A stated choice experiment in Vietnam," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 57(C), pages 1-11.
  14. Nicholas Rivers & Brandon Schaufele, 2012. "Carbon Tax Salience and Gasoline Demand," Working Papers, University of Ottawa, Department of Economics 1211E, University of Ottawa, Department of Economics.
  15. Ibrahim Alhulail & Kenji Takeuchi, 2014. "Effects of Tax Incentives on Sales of Eco-Friendly Vehicles: Evidence from Japan," Discussion Papers, Graduate School of Economics, Kobe University 1412, Graduate School of Economics, Kobe University.

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