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Trade-offs in CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece

Author

Listed:
  • Adamos Adamou

    (Department of Economics, University of Cyprus, Cyprus)

  • Sofronis Clerides

    (Department of Economics, University of Cyprus, Cyprus; Centre for Economic Policy Research, UK)

  • Theodoros Zachariadis

    (Department of Environmental Science and Technology, Cyprus University of Technology, Cyprus)

Abstract

We estimate demand for automobiles in Greece using a discrete choice model of product differentiation and use the model to evaluate carbon-based tax schemes that could shift consumer purchases towards low-CO2 cars and thus lead to the reduction of fuel use and CO2 emissions. We find that careful policy design, supported by appropriate modeling, can bring about substantial environmental benefits without losing control of economic parameters such as public finances or firm profits. This finding comes in contrast to the results of recent vehicle tax reforms in European countries, which turned out to be more costly than initially expected. Our analysis indicates that, especially in countries with already heavy vehicle taxation, improper implementation of carbon-based taxes can have adverse unintended environmental consequences.

Suggested Citation

  • Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Trade-offs in CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," Working Paper series 33_12, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:33_12
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    References listed on IDEAS

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    Cited by:

    1. Alberini, Anna & Bareit, Markus & Filippini, Massimo & Martinez-Cruz, Adan L., 2018. "The impact of emissions-based taxes on the retirement of used and inefficient vehicles: The case of Switzerland," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 234-258.
    2. Nkosi, Mfundo & Dikgang, Johane & Kutela Gelo, Dambala & Pholo, Alain, 2021. "Greening the vehicle fleet, how does South Africa’s tax reforms affect new car sales," EconStor Preprints 236726, ZBW - Leibniz Information Centre for Economics.
    3. Tryfonas Christodoulou & Sofronis Clerides, 2012. "Emissions-Based Vehicle Tax Reform for Cyprus: A Simulation Analysis," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 6(1), pages 3-20, June.
    4. Mayeres, Inge & Vanhulsel, Marlies, 2017. "CarTax: A simulation model for analysing the reform of car taxation in Flanders," Research in Transportation Economics, Elsevier, vol. 62(C), pages 11-24.
    5. Davide Cerruti & Anna Alberini & Joshua Linn, 2019. "Charging Drivers by the Pound: How Does the UK Vehicle Tax System Affect CO2 Emissions?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 99-129, September.
    6. 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.

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    Keywords

    automobile market; carbon taxation; emissions; feebates;
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