Tax Policy and CO2 Emissions – An Econometric Analysis of the German Automobile Market
AbstractIn addition to efficiency standards and consumer information, car-related taxes constitute one of three pillars of the European Commission’s strategy to reduce CO2 emissions from passenger cars.A longstanding question concerns the effectiveness of such taxes in determining the car-purchasing behavior of households. Several recent studies suggest that purchases are primarily determined by retail costs rather than by taxes, the latter of which are typically incurred over the lifetime of the car. Using panel data on new-car registrations in Germany, Europe’s largest car market, the present paper addresses this issue with an econometric analysis of the impact of fuel costs and circulation taxes on car market shares. By employing a nested logit model that explicitly recognizes the segmented structure of the car market, the analysis takes account of correlation in unobserved shocks among cars belonging to the same market segment. Moreover, given the panel structure of the data, a fixed effects estimator is employed to control for the influence of unobservable, timeinvariant automobile attributes that could otherwise induce biases in the estimated coefficients. Contrasting with much of the evidence garnered to date, the results suggest that circulation taxes and fuel costs significantly determine car market shares, and hence may serve as effective instruments in influencing the composition of the car fleet and associated CO2 emissions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0089.
Length: 21 pages
Date of creation: Feb 2009
Date of revision:
Find related papers by JEL classification:
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
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.:
- Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2008. "A Regression on Climate Policy - The European Commission's Proposal to Reduce CO2 Emissions from Transport," Ruhr Economic Papers 0044, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Aviv Nevo, 2000. "A Practitioner's Guide to Estimation of Random-Coefficients Logit Models of Demand," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(4), pages 513-548, December.
- Manuel Frondel & Colin Vance, 2009.
"Do High Oil Prices Matter? Evidence on the Mobility Behavior of German Households,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 43(1), pages 81-94, May.
- Manuel Frondel & Colin Vance, 2008. "Do High Oil Prices Matter? – Evidence on the Mobility Behavior of German Households," Ruhr Economic Papers 0072, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Lidia Mannarino, 2009. "Il Mercato Delle Automobili In Italia: Effetti Del Regolamento Cee 1400/2002," Working Papers 200913, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Weiler).
If references are entirely missing, you can add them using this form.