Automobile fuel efficiency policies with international innovation spillovers
AbstractIn this paper, we explore automobile fuel efficiency policies in the presence of two externalities i) a global environmental problem and ii) international innovation spillovers. Using a simple model with two regions, we show that both a fuel tax and a tax on vehicles based on their fuel economy rating are needed to decentralize the first best. We also show that if policies are not coordinated between regions, the resulting gas taxes will be set too low and each region will use the tax on fuel rating, to reduce the damage caused by foreign drivers. If standards are used instead of taxes, we find that spillovers may alleviate free-riding. Under some conditions, a strict standard in one region may favour the adoption of a strict standard in the other one.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0817.
Date of creation: May 2008
Date of revision:
Environmental policy; automobile; fuel efficiency standard; gasoline tax; innovation spillovers;
Find related papers by JEL classification:
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-07 (All new papers)
- NEP-ENE-2008-10-07 (Energy Economics)
- NEP-ENV-2008-10-07 (Environmental Economics)
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- 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.
- Anderson, Soren & Parry, Ian & Sallee, James M. & Fischer, Carolyn, 2010. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," Discussion Papers dp-10-45, Resources For the Future.
- Soren T. Anderson & Carolyn Fischer & Ian Parry & James M. Sallee, 2010. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," NBER Working Papers 16370, National Bureau of Economic Research, Inc.
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