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On the emissions–inequality and emissions–welfare trade-offs in energy taxation: Evidence on the German car fuels tax

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  • Nikodinoska, Dragana
  • Schröder, Carsten

Abstract

By using estimates from a Demographically-Scaled Quadratic Almost Ideal Demand System (DQUAIDS), we investigate how the German car fuels tax changes the private households’ CO2 emissions, living standards, and post-tax income distribution. Our results show that the tax implies a trade-off between the aim to reduce emissions and vertical equity, which refers to the idea that people with a greater ability to pay taxes should pay more.

Suggested Citation

  • Nikodinoska, Dragana & Schröder, Carsten, 2016. "On the emissions–inequality and emissions–welfare trade-offs in energy taxation: Evidence on the German car fuels tax," Resource and Energy Economics, Elsevier, vol. 44(C), pages 206-233.
    • Handle: RePEc:eee:resene:v:44:y:2016:i:c:p:206-233
    DOI: 10.1016/j.reseneeco.2016.03.001
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    9. Moz-Christofoletti, Maria Alice & Pereda, Paula Carvalho, 2021. "Winners and losers: the distributional impacts of a carbon tax in Brazil," Ecological Economics, Elsevier, vol. 183(C).
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    11. Frondel, Manuel & Kaestner, Kathrin & Sommer, Stephan & Vance, Colin, 2021. "Photovoltaics and the Solar Rebound: Evidence for Germany," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242356, Verein für Socialpolitik / German Economic Association.
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    14. Edenhofer, Ottmar & Flachsland, Christian & Kalkuhl, Matthias & Knopf, Brigitte & Pahle, Michael, 2019. "Optionen für eine CO2-Preisreform," Working Papers 04/2019, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
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    19. Tovar Reanos, Miguel, 2020. "Car ownership and the distributional and environmental policies to reduce driving behavior," Papers WP673, Economic and Social Research Institute (ESRI).
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    More about this item

    Keywords

    Energy taxes; Environmental taxes; Energy demand; Emissions; Tax incidence; Redistribution; Inequality;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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