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Effects of Tax Incentives on Sales of Eco-Friendly Vehicles: Evidence from Japan

Author

Listed:
  • Ibrahim Alhulail

    (Graduate School of Economics, Kobe University)

  • Kenji Takeuchi

    (Graduate School of Economics, Kobe University)

Abstract

This study examines the effects of economic incentives on the sales of ecofriendly vehicles in Japan. We focus on the Tonnage and Acquisition Tax Cuts for Eco-Friendly Vehicles and the two waves of Eco-Car Subsidies implemented in Japan. We use the monthly sales data of 10 vehicles from April 2006 to March 2013. We find that the effects of the tax incentives were more significant than the effect of gasoline price. This is in contrast to results from the United States and Canada, where gasoline prices have had a larger effect on increasing the adoption levels of hybrid electric vehicles. The difference is due to the structure of the tax cut. Japan fs policy of taxes paid upon purchase was more effective compared to the policies in the United States and Canada, where certain tax cuts were on income taxes.

Suggested Citation

  • Ibrahim Alhulail & Kenji Takeuchi, 2014. "Effects of Tax Incentives on Sales of Eco-Friendly Vehicles: Evidence from Japan," Discussion Papers 1412, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1412
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2014/1412.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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, February.
    3. 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.
    4. 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.
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    Cited by:

    1. Tomomi Miyazaki, 2016. "Fiscal stimulus effectiveness in Japan: evidence from recent policies," Applied Economics, Taylor & Francis Journals, vol. 48(27), pages 2506-2515, June.
    2. Tamechika, Hanae, 2020. "Effects of Environment-Related Stimulus Policies: An Event Study Approach," 2020 Conference (64th), February 12-14, 2020, Perth, Western Australia 305244, Australian Agricultural and Resource Economics Society.
    3. Hanae Tamechika & Shin’ya Okuda, 2017. "Stock price responses to the eco-points programme for electrical household appliances: evidence from Japan," Applied Economics, Taylor & Francis Journals, vol. 49(58), pages 5856-5864, December.
    4. Palmer, Kate & Tate, James E. & Wadud, Zia & Nellthorp, John, 2018. "Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan," Applied Energy, Elsevier, vol. 209(C), pages 108-119.
    5. Ionel Bostan & Valentina Diana Rusu, 2021. "The Consumption of Alcoholic Beverages Can Be Reduced by Fiscal Means? Study on the Case of Romania," Sustainability, MDPI, vol. 13(14), pages 1-21, July.
    6. Heechul Min, 2015. "Korea's Cash-for-Clunkers Program: Household-Level Evidence," Asian Economic Journal, East Asian Economic Association, vol. 29(4), pages 347-363, December.
    7. Tomomi Miyazaki, 2014. "Fiscal Policy Effectiveness in Japan: Experiences from Recent Policies," Discussion Papers 1416, Graduate School of Economics, Kobe University.
    8. Laborda, Juan & Moral, María J., 2019. "Scrappage by age: Cash for Clunkers matters!," Transportation Research Part A: Policy and Practice, Elsevier, vol. 124(C), pages 488-504.

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    More about this item

    Keywords

    Eco-Friendly Vehicle; Hybrid Electric Vehicle; Tax Cuts; Subsidy; Gasoline Prices;
    All these keywords.

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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