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Vehicle Choices, Miles Driven, and Pollution Policies

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Author Info
Ye Feng
Don Fullerton
Li Gan

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Abstract

Mobile sources contribute large percentages of each pollutant, but technology is not yet available to measure and tax emissions from each vehicle. We build a behavioral model of household choices about vehicles and miles traveled. The ideal-but-unavailable emissions tax would encourage drivers to abate emissions through many behaviors, some of which involve market transactions that can be observed for feasible market incentives (such as a gas tax, subsidy to new cars, or tax by vehicle type). Our model can calculate behavioral effects of each such price and thus calculate car choices, miles, and emissions. A nested logit structure is used to model discrete choices among different vehicle bundles. We also consider continuous choices of miles driven and the age of each vehicle. We propose a consistent estimation method for both discrete and continuous demands in one step, to capture the interactive effects of simultaneous decisions. Results are compared with those of the traditional sequential estimation procedure.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11553.

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Date of creation: Aug 2005
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Handle: RePEc:nbr:nberwo:11553

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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  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. [Downloadable!] (restricted)
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  4. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March. [Downloadable!] (restricted)
  5. Don Fullerton & Sarah West, 2000. "Tax and Subsidy Combinations for the Control of Car Pollution," NBER Working Papers 7774, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Hanemann, W Michael, 1984. "Discrete-Continuous Models of Consumer Demand," Econometrica, Econometric Society, vol. 52(3), pages 541-61, May. [Downloadable!] (restricted)
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  11. Fred Mannering & Clifford Winston, 1985. "A Dynamic Empirical Analysis of Household Vehicle Ownership and Utilization," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 215-236, Summer. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eskeland, Gunnar S. & Mideksa, Torben K., 2008. "Transportation fuel use, technology and standards: The role of credibility and expectations," Policy Research Working Paper Series 4695, The World Bank. [Downloadable!]
  2. McManus, Walter, 2006. "Can proactive fuel economy strategies help automakers mitigate fuel price risk?," MPRA Paper 3460, University Library of Munich, Germany. [Downloadable!]
  3. Don Fullerton & Li Gan, 2005. "Cost-Effective Policies to Reduce Vehicle Emissions," NBER Working Papers 11174, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Antonio M. Bento & Lawrence H. Goulder & Emeric Henry & Mark R. Jacobsen & Roger H. von Haefen, 2005. "Distributional and Efficiency Impacts of Gasoline Taxes: An Econometrically Based Multi-market Study," American Economic Review, American Economic Association, vol. 95(2), pages 282-287, May. [Downloadable!]
  5. Gilbert E. Metcalf, 2006. "Federal Tax Policy Towards Energy," Discussion Papers Series, Department of Economics, Tufts University 0612, Department of Economics, Tufts University. [Downloadable!]
    Other versions:
  6. McManus, Walter, 2007. "Economic analysis of feebates to reduce greenhouse gas emissions from light vehicles for California," MPRA Paper 3461, University Library of Munich, Germany. [Downloadable!]
  7. Lucas W. Davis & Lutz Kilian, 2008. "The Allocative Cost of Price Ceilings in the U.S. Residential Market for Natural Gas," NBER Working Papers 14030, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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