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On the relevance of differentiated car purchase taxes in light of the rebound effect

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  • Bénédicte Meurisse

Abstract

The significant weight of CO2 emissions resulting from car use in the total of CO2 emissions is enough of a signal to set up policy tools aiming at reducing such emissions. This paper investigates the effects of setting a penalty on the purchase of high emitting cars (i.e. a Malus). With static comparative analyses of a basic model of consumer’s behaviour facing two alternatives: a clean and a dirty vehicles, we essentially find that a rebound effect does not necessarily accompany the reduction in the average fuel consumption per kilometre resulting from the implementation of a differentiated car purchase tax such as a Malus scheme. This is because the improvement of the fuel-efficiency is observed at the aggregate scale and not at the individual level. Thereby, it happens that we observe a rebound effect only under certain conditions pertaining to the characteristics of the vehicles that make up the fleet. We also show that, from the moment that a rebound effect occurs, the higher the amount of Malus, the higher the rebound effect. It implicitly means that because of the rebound effect, the higher the pricing scheme, the less efficient the purchase tax.

Suggested Citation

  • Bénédicte Meurisse, 2015. "On the relevance of differentiated car purchase taxes in light of the rebound effect," EconomiX Working Papers 2015-24, University of Paris Nanterre, EconomiX.
  • Handle: RePEc:drm:wpaper:2015-24
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    More about this item

    Keywords

    car purchase decision; car use; CO2 emissions; rebound effect; penalty on car purchase.;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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