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Coase and Car Repair: Who Should Be Responsible for Emissions of Vehicles in Use?

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Author Info
Harrington, Winston () (Resources for the Future)
McConnell, Virginia () (Resources for the Future)

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Abstract

This paper examines the current assignment of liability for in-use vehicle emissions and suggests some alternative policies that may reduce the cost and increase the effectiveness. The authors first discuss the cost, performance and incentives under current Inspection and Maintenance (I/M) programs, using the recently implemented Arizona "Enhanced I/M" program as an example. These programs were designed to identify and repair vehicles with malfunctioning emission control systems. Since their inception, however, I/M programs have been plagued by transaction costs that have drastically raised the cost of I/M as well as limited its effectiveness. These transaction costs fall into three categories: emission monitoring, repair avoidance, and non-transferability of emission reductions. The authors argue that most of these transaction costs can be attributed to the current assignment of liability for I/M to motorists, and they examine the potential for other liability assignments to reduce transaction costs and improve program efficiency. Among the alternative institutional arrangements discussed are greater imposition of liability on manufacturers, emission repair subsidies, repair liability auctions, and vehicle leasing.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-99-22.

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Date of creation: 01 Feb 1999
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Handle: RePEc:rff:dpaper:dp-99-22

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This paper has been announced in the following NEP Reports: This item is featured on the following reading lists:
  1. Studies on the automobile industry
References listed on IDEAS
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. Thomas N. Hubbard, 1997. "Using Inspection And Maintenance Programs To Regulate Vehicle Emissions," Contemporary Economic Policy, Western Economic Association International, vol. 15(2), pages 52-62, 04. [Downloadable!] (restricted)
  2. James Boyd, 1997. "'Green money' in the bank: firm responses to environmental financial responsibility rules," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(6), pages 491-506.
  3. Harrington, Winston, 1997. "Fuel Economy and Motor Vehicle Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 240-252, July. [Downloadable!] (restricted)
  4. Thomas N. Hubbard, 1998. "An Empirical Examination of Moral Hazard in the Vehicle Inspection Market," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 406-426, Summer. [Downloadable!] (restricted)
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(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. Ando, Amy & Harrington, Winston & McConnell, Virginia, 1999. "The Enhanced I/M Program in Arizona: Costs, Effectiveness, and a Comparison with Pre-regulatory Estimates," Discussion Papers dp-99-37, Resources For the Future. [Downloadable!]
  2. James Boyce, 2003. "Inequality and Environmental Protection," Working Papers wp52, Political Economy Research Institute, University of Massachusetts at Amherst. [Downloadable!]
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