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CO2 mitigation in road transport: Gasoline taxation and/or fuel-efficiency regulation?

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Abstract

Although gasoline taxes are widely used (nearly) efficient CO2 emission controls, additional fuel-efficiency regulation is applied e.g. in the USA and in Europe. In a simple analytical model, we specify the welfare implications of (i) gasoline taxes, (ii) of 'gas-guzzler taxes' (iii) of fuel-efficiency standards, and of combinations of the above. Both forms (ii) and (iii) of fuel-efficiency regulation turn out to produce the same suboptimally low emission rates. Combining (i) and (ii) is also distortionary, while efficiency can be secured by combining (i) and (iii). However, in the optimal mix of the latter two instruments the fuel-efficiency standard is redundant.

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Bibliographic Info

Paper provided by Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht in its series Volkswirtschaftliche Diskussionsbeiträge with number 133-09.

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Length: 28 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:sie:siegen:133-09

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Keywords: CO2 emissions; road transport; fuel efficiency regulation; gasoline tax;

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  1. Gas taxes are still the best option to reduce CO2 emissions
    by Economic Logician in Economic Logic on 2009-10-06 14:01:00

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