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Driving innovation? Carbon tax effects in the Swedish transport sector

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  • aus dem Moore, Nils
  • Brehm, Johannes
  • Gruhl, Henri

Abstract

Does a carbon tax stimulate low-carbon innovation in the transport sector? We exploit an environmental tax reform in Sweden that introduced both a carbon and a value-added tax on transport fuels. Synthetic control estimates consistently find that the tax reform caused large and significant increases in low-carbon patents. We provide suggestive evidence that the carbon tax drives the effect while fuel price changes with comparable magnitude did not significantly affect low-carbon innovation. Our findings suggest that salient carbon prices may foster low-carbon innovation more effectively than fuel price elasticity estimates suggest.

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  • aus dem Moore, Nils & Brehm, Johannes & Gruhl, Henri, 2025. "Driving innovation? Carbon tax effects in the Swedish transport sector," Journal of Public Economics, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:pubeco:v:248:y:2025:i:c:s0047272725001422
    DOI: 10.1016/j.jpubeco.2025.105444
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    JEL classification:

    • 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
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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