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Fees and rebates on new vehicles: Impacts on fuel efficiency, carbon dioxide emissions, and consumer surplus

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Author Info

  • Train, Kenneth E.
  • Davis, William B.
  • Levine, Mark D.

Abstract

Several incentive systems are examined that provide rebates on vehicles with higher-than-average fuel efficiency and levy fees on vehicles with less efficiency. The rebates and fees are applied to new vehicles at the time of purchase, and the rates are set such that the total outlay for rebates equals the revenues from fees. We find that moderately-sized rebates and fees result in a substantial increase in average fuel efficiency. Most of the effect is due to manufacturers' incorporating more fuel-efficiency technologies into the vehicles that they offer, since the rebates and fees effectively lower the price to manufacturers of these technologies. Consumer surplus is found to rise, and the profits of domestic manufacturers are estimated to drop only slightly under most systems and actually to rise under one system.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part E: Logistics and Transportation Review.

Volume (Year): 33 (1997)
Issue (Month): 1 (March)
Pages: 1-13

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Handle: RePEc:eee:transe:v:33:y:1997:i:1:p:1-13

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Cited by:
  1. Joerg Breitscheidel & Hans Gersbach, 2005. "Self-Financing Environmental Mechanisms," CESifo Working Paper Series 1528, CESifo Group Munich.
  2. Fischer, Carolyn, 2008. "Comparing flexibility mechanisms for fuel economy standards," Energy Policy, Elsevier, vol. 36(8), pages 3106-3114, August.
  3. Fullerton, Don & West, Sarah E., 2002. "Can Taxes on Cars and on Gasoline Mimic an Unavailable Tax on Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 135-157, January.
  4. Martin, Elliot William, 2009. "New Vehicle Choices, Fuel Economy and Vehicle Incentives: An Analysis of Hybrid Tax Credits and Gasoline Tax," University of California Transportation Center, Working Papers qt6sz198c2, University of California Transportation Center.
  5. Ye Feng & Don Fullerton & Li Gan, 2005. "Vehicle Choices, Miles Driven, and Pollution Policies," NBER Working Papers 11553, National Bureau of Economic Research, Inc.
  6. Martin, Elliott William, 2009. "New Vehicle Choice, Fuel Economy and Vehicle Incentives: An Analysis of Hybrid Tax Credits and the Gasoline Tax," University of California Transportation Center, Working Papers qt5gd206wv, University of California Transportation Center.
  7. Peters, Anja & Mueller, Michel G. & de Haan, Peter & Scholz, Roland W., 2008. "Feebates promoting energy-efficient cars: Design options to address more consumers and possible counteracting effects," Energy Policy, Elsevier, vol. 36(4), pages 1355-1365, April.
  8. Galinato, Gregmar I. & Yoder, Jonathan K., 2010. "An integrated tax-subsidy policy for carbon emission reduction," Resource and Energy Economics, Elsevier, vol. 32(3), pages 310-326, August.
  9. Chen, Anning, 2011. "Reliable GPS Integer Ambiguity Resolution," University of California Transportation Center, Working Papers qt9gs0t2f9, University of California Transportation Center.

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