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Are green cars an optimal and efficient choice for motorists? Evidence from Italy

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  • Agovino, Massimiliano
  • Ferraro, Aniello
  • Garofalo, Antonio

Abstract

This study evaluates whether a motorist's choice over green cars (i.e., cars with featuring low CO2 emissions) and non-green cars (i.e., cars featuring high CO2 emissions) is efficient. To this end, we present a micro-founded model of motorist choice incorporating the impact of eco-incentives and taxation on CO2 emissions. Subsequently, we implement data envelopment analysis on a large database of new cars registered in 2019 to evaluate efficiency. The results show that the motorist's optimal choice (green car) does not coincide with the efficient choice. Moreover, motorist choice is mainly guided by the high price of green cars. On average, the efficient choice coincides with cars that end up in the dark area (they do not benefit from eco-incentives and do not pay the pollution tax), being the cheapest, the lightest, the least powerful (low Kw) and petrol fuelled. On average, these elements pertain to Italian motorists with respect to their tastes; most importantly, their budgets do not go well with the high costs of green cars.

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  • Agovino, Massimiliano & Ferraro, Aniello & Garofalo, Antonio, 2023. "Are green cars an optimal and efficient choice for motorists? Evidence from Italy," Transport Policy, Elsevier, vol. 141(C), pages 140-151.
    • Handle: RePEc:eee:trapol:v:141:y:2023:i:c:p:140-151
    DOI: 10.1016/j.tranpol.2023.07.015
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    More about this item

    Keywords

    Data envelopment analysis; Efficient consumer; Sustainable development; Transportation economics; Externalities; Consumer choices;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D1 - Microeconomics - - Household Behavior

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