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Environmental Regulation and Product Attributes: The Case of European Passenger Vehicle Greenhouse Gas Emissions Standards

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  • Yujie Lin
  • Joshua Linn

Abstract

Energy efficiency and carbon dioxide emissions standards apply to many consumer durables, such as refrigerators and passenger vehicles. Welfare analysis of these standards is complicated by the fact that product manufacturers choose a wide range of product attributes, many of which are unobserved by the researcher. Whereas the literature has considered the effects of standards on product prices, energy efficiency, and perhaps one or two other attributes, we show that in a differentiated product market, standards can affect virtually any product attribute, and those effects have ambiguous implications for consumer welfare. This paper implements a novel strategy to estimate the causal welfare effects of standards on product attributes. Considering European carbon dioxide emissions standards for passenger vehicles, we find that these standards have reduced fuel consumption and emissions. However, the standards have unintentionally reduced vehicle quality, which undermines 26% of the welfare gains of the standards.

Suggested Citation

  • Yujie Lin & Joshua Linn, 2023. "Environmental Regulation and Product Attributes: The Case of European Passenger Vehicle Greenhouse Gas Emissions Standards," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(1), pages 1-32.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/720903
    DOI: 10.1086/720903
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    Cited by:

    1. Zhang, Xiao-Bing & Fei, Yinxin & Duan, Hongbo & Soytas, Ugur & Crifo, Patricia & Sterner, Thomas, 2025. "Implicit discount rates and energy efficiency gap in air conditioning: Evidence from the Chinese market," Resource and Energy Economics, Elsevier, vol. 82(C).
    2. Fei, Yinxin & Qin, Ping & Chu, Yanlai & Zheng, Huanhuan & Tan-Soo, Jie-Sheng & Zhang, Xiao-Bing, 2025. "Does high gasoline price spur electric vehicle adoption? Evidence from Chinese cities," Energy Economics, Elsevier, vol. 142(C).
    3. Markus Dertwinkel-Kalt & Christian Wey, 2025. "The Economics of Fleet-Wide Emission Targets and Pooling in the EU Car Market," CESifo Working Paper Series 11762, CESifo.
    4. Zhang, Dongyang & Bai, Dingchuan & He, Yurun & Sun, Qiaobing, 2024. "Synergistic abatement effects of Broadband China and environmental regulation: Firm-level evidence," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    5. Alatawneh, Anas & Torok, Adam, 2025. "Projecting AV sales in the EU-27 and UK: Insights from Euro emission standards and historical trends," Transport Policy, Elsevier, vol. 163(C), pages 91-101.
    6. Jiqiang Huang & Kengcheng Zheng & Chaosheng Han, 2024. "Green finance and enterprise green innovation: incentive effect and synergy perspective," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 28107-28129, November.

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