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The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate

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  • Huse, Cristian
  • Lucinda, Claudio

Abstract

We quantify the effects of the Swedish GCR, a program to reduce oil dependence and greenhouse gas emissions in the automobile industry. We find the GCR to increase the market shares of `green cars' and its cost to be $109/tonCO2 saved, thus 5 times the price of an emission permit. Since the main green cars in Sweden are FFVs (flexible-fuel vehicles), which can switch between petrol (gasoline) and ethanol, we also account for fuel choice, which increases the cost of the program. Finally, we show that consumers would have purchased FFVs regardless of the rebate provided by the GCR.

Suggested Citation

  • Huse, Cristian & Lucinda, Claudio, 2013. "The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate," MPRA Paper 48905, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:48905
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Durrmeyer, Isis & Samano, Mario, 2016. "To Rebate or Not to Rebate: Fuel Economy Standards vs. Feebates?," TSE Working Papers 16-732, Toulouse School of Economics (TSE), revised May 2017.
    2. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
    3. repec:eee:jeeman:v:88:y:2018:i:c:p:234-258 is not listed on IDEAS
    4. Grigolon, Laura & Reynaert, Mathias & Verboven, Frank, 2014. "Consumer valuation of fuel costs and the effectiveness of tax policy: Evidence from the European car market," CEPR Discussion Papers 10301, C.E.P.R. Discussion Papers.
    5. repec:eee:jeeman:v:88:y:2018:i:c:p:159-179 is not listed on IDEAS
    6. repec:eee:retrec:v:62:y:2017:i:c:p:11-24 is not listed on IDEAS
    7. Pavan, Giulia, 2017. "Green Car Adoption and the Supply of Alternative Fuels," TSE Working Papers 17-875, Toulouse School of Economics (TSE).
    8. Reyer Gerlagh & Inge van den Bijgaart & Hans Nijland & Thomas Michielsen, 2015. "Fiscal Policy and CO2 Emissions of New Passenger Cars in the EU," Working Papers 2015.32, Fondazione Eni Enrico Mattei.
    9. Chao Wei & Shanjun Li, 2014. "The Cost of Greening Stimulus: A Dynamic Discrete Choice Analysis of Vehicle Scrappage Programs," Working Papers 2014-12, The George Washington University, Institute for International Economic Policy.
    10. D'Haultfoeuille, Xavier & Durrmeyer, Isis & Février, Philippe, 2013. "The Effect of Public Policies on Consumers' Preferences: Lessons from the French Automobile Market," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 422, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    11. repec:eee:pubeco:v:155:y:2017:i:c:p:93-107 is not listed on IDEAS
    12. Kenneth Gillingham & Anders Munk-Nielsen, 2016. "A Tale of Two Tails: Commuting and the Fuel Price Response in Driving," NBER Working Papers 22937, National Bureau of Economic Research, Inc.
    13. van den Bijgaart, Inge, 2016. "Essays in environmental economics and policy," Other publications TiSEM 298bee2a-cb08-4173-9fe1-8, Tilburg University, School of Economics and Management.
    14. D’Haultfœuille, Xavier & Durrmeyer, Isis & Février, Philippe, 2016. "Disentangling sources of vehicle emissions reduction in France: 2003–2008," International Journal of Industrial Organization, Elsevier, vol. 47(C), pages 186-229.
    15. Huse, Cristian & Koptyug, Nikita, 2016. "Bailing on the car that wasn’t bailed out: bounding consumer reactions to financial distress," MPRA Paper 72796, University Library of Munich, Germany.
    16. repec:kap:enreec:v:69:y:2018:i:1:d:10.1007_s10640-016-0067-6 is not listed on IDEAS
    17. Anna Alberini & Markus Bareit, 2016. "The Effect of Registration Taxes on New Car Sales and Emissions: Evidence from Switzerland," CER-ETH Economics working paper series 16/245, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    18. Anna Alberini, Markus Bareit and Massimo Filippini, 2016. "What is the Effect of Fuel Efficiency Information on Car Prices? Evidence from Switzerland," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    19. Davide Cerruti & Anna Alberini & Joshua Linn, 2017. "Charging Drivers by the Pound: The Effects of the UK Vehicle Tax System," CER-ETH Economics working paper series 17/271, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    20. Anna Alberini & Markus Bareit & Adan Martinez-Cruz & Massimo Filippini, 2016. "The Impact of Emissions-Based Taxes on the Retirement of Used and Inefficient Vehicles: The Case of Switzerland," CER-ETH Economics working paper series 16/257, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

    More about this item

    Keywords

    CO2 emissions; Ethanol; Environmental policy; Flexible-fuel vehicles; Fuel economy; Green Car; Governmental policy; Greenhouse gases; Renewable fuels.;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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