IDEAS home Printed from https://ideas.repec.org/p/sie/siegen/133-09.html
   My bibliography  Save this paper

CO2 mitigation in road transport: Gasoline taxation and/or fuel-efficiency regulation?

Author

Abstract

Although gasoline taxes are widely used (nearly) efficient CO2 emission controls, additional fuel-efficiency regulation is applied e.g. in the USA and in Europe. In a simple analytical model, we specify the welfare implications of (i) gasoline taxes, (ii) of 'gas-guzzler taxes' (iii) of fuel-efficiency standards, and of combinations of the above. Both forms (ii) and (iii) of fuel-efficiency regulation turn out to produce the same suboptimally low emission rates. Combining (i) and (ii) is also distortionary, while efficiency can be secured by combining (i) and (iii). However, in the optimal mix of the latter two instruments the fuel-efficiency standard is redundant.

Suggested Citation

  • Rüdiger Pethig, 2009. "CO2 mitigation in road transport: Gasoline taxation and/or fuel-efficiency regulation?," Volkswirtschaftliche Diskussionsbeiträge 133-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  • Handle: RePEc:sie:siegen:133-09
    as

    Download full text from publisher

    File URL: http://www.wiwi.uni-siegen.de/vwl/repec/sie/papers/133-09.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
    2. Paul Joskow & Jean Tirole, 2007. "Reliability and competitive electricity markets," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 60-84, March.
    3. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
    4. Jeroen Klomp & Jakob de Haan, 2008. "Effects of Governance on Health: a Cross-National Analysis of 101 Countries," Kyklos, Wiley Blackwell, vol. 61(4), pages 599-614, November.
    5. Hanushek, Eric A. & Jamison, Dean T. & Jamison, Eliot A. & Wößmann, Ludger, 2008. "Education and economic growth: It’s not just going to school, but learning something while there that matters," Munich Reprints in Economics 20467, University of Munich, Department of Economics.
    6. Mokyr, Joel, 2005. "Long-Term Economic Growth and the History of Technology," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 17, pages 1113-1180 Elsevier.
    7. Beate Jochimsen, 2009. "Service Quality in Modern Bureaucracy: Parkinson's Theory at Work," Kyklos, Wiley Blackwell, vol. 62(1), pages 44-64, February.
    8. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, pages 177-200.
    9. Isabelle Brocas & Juan D. Carrillo, 2008. "The Brain as a Hierarchical Organization," American Economic Review, American Economic Association, pages 1312-1346.
    10. Blaug, Mark, 1976. "The Empirical Status of Human Capital Theory: A Slightly Jaundiced Survey," Journal of Economic Literature, American Economic Association, pages 827-855.
    11. Bruno Biais & Enrico Perotti, 2008. "Entrepreneurs and new ideas," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1105-1125.
    12. Edward P. Lazear & Kathryn L. Shaw, 2007. "Personnel Economics: The Economist's View of Human Resources," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 91-114, Fall.
    13. Jones, Charles I., 2005. "Growth and Ideas," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111 Elsevier.
    14. Klenow, Peter J. & Rodriguez-Clare, Andres, 1997. "Economic growth: A review essay," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 597-617, December.
    15. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, pages 359-368.
    16. Kevin J. Stiroh, 2001. "What drives productivity growth?," Economic Policy Review, Federal Reserve Bank of New York, issue Mar, pages 37-59.
    17. Eric A. Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Journal of Economic Literature, American Economic Association, pages 607-668.
    18. Theo Eicher & Oliver Röhn, 2007. "Institutional Determinants of Economic Performance in OECD Countries – An Institutions Climate Index," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(1), pages 38-49, 05.
    19. Ehrlich, Isaac & Lui, Francis, 1997. "The problem of population and growth: A review of the literature from Malthus to contemporary models of endogenous population and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 205-242, January.
    20. Ioannis N. Kessides, 2005. "Infrastructure Privatization and Regulation: Promises and Perils," World Bank Research Observer, World Bank Group, vol. 20(1), pages 81-108.
    21. Robert Lensink & Bert Scholtens, 2007. "Legal Restrictions and Investment Growth," Kyklos, Wiley Blackwell, vol. 60(4), pages 575-600, November.
    22. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, pages 325-366.
    23. James J. Heckman, 2008. "The Case for Investing in Disadvantaged Young Children," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(2), pages 3-8, 07.
    24. Walter Buhr, 2003. "What is infrastructure?," Volkswirtschaftliche Diskussionsbeiträge 107-03, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    25. Fabrizio Zilibotti, 2008. "Economic Growth through the Development Process," CESifo Economic Studies, CESifo, vol. 54(3), pages 325-357, September.
    26. Martin Baethge & Lena Arends, 2008. "International Large Scale Assessment of Vocational Education and Training (VET-LSA)," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(2), pages 29-35, 07.
    27. Emmanuelle Auriol & Régis Renault, 2008. "Status and incentives," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 305-326.
    28. Gabriela Schütz & Heinrich W. Ursprung & Ludger Wößmann, 2008. "Education Policy and Equality of Opportunity," Kyklos, Wiley Blackwell, vol. 61(2), pages 279-308, May.
    29. Avinash Dixit, 2009. "Governance Institutions and Economic Activity," American Economic Review, American Economic Association, vol. 99(1), pages 5-24, March.
    30. Dearden, James & Ickes, Barry W & Samuelson, Larry, 1990. "To Innovate or Not to Innovate: Incentives and Innovation in Hierarchies," American Economic Review, American Economic Association, vol. 80(5), pages 1105-1124, December.
    31. Fabio Sabatini, 2008. "Social Capital and the Quality of Economic Development," Kyklos, Wiley Blackwell, vol. 61(3), pages 466-499, August.
    32. Canice Prendergast, 2008. "Intrinsic Motivation and Incentives," American Economic Review, American Economic Association, vol. 98(2), pages 201-205, May.
    33. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 88(1), pages 139-156, March.
    34. Ward Romp & Jakob de Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, pages 6-52.
    35. James M. Buchanan & Yong J. Yoon, 2008. "Public Choice and the Extent of the Market," Kyklos, Wiley Blackwell, vol. 61(2), pages 177-188, May.
    36. Wolfgang Ochel & Rigmar Osterkamp, 2007. "What Does the Institutions Climate Index for OECD Countries Tell us about Institutional Change and Economic Policy Reforms?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(1), pages 50-62, 05.
    37. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "State Infrastructure and Productive Performance," American Economic Review, American Economic Association, vol. 86(5), pages 1095-1111, December.
    38. Marcus Kottmann / Bernd Kriegesmann / Frank Striewe, 2008. "Fachkräftemangel in Deutschland: Handlungsfelder für eine Neuausrichtung der beruflichen Bildung," List Forum Chapter,in: List Forum Band 34, edition 1, volume 1, chapter 5, pages 56 - 70 List Gesellschaft e.V..
    39. Donges, Juergen B. & Engels, Wolfram & Hamm, Walter & Möschel, Wernhard & Neumann, Manfred J. M. & Sievert, Olaf, 1993. "Zur Reform der Hochschulen," Kronberger Kreis-Studien 27, Stiftung Marktwirtschaft / The Market Economy Foundation, Berlin.
    40. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
    41. Hans Pitlik, 2004. "Institutionelle Voraussetzungen marktorientierter Reformen der Wirtschaftspolitik," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 240/2004, Department of Economics, University of Hohenheim, Germany.
    42. Friedrich Breyer, 2008. "Die Chancen der Sozialen Marktwirtschaft und die Rolle der Ökonomen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(2), pages 125-138, May.
    43. Robert William Fogel, 1990. "The Conquest of High Mortality and Hunger in Europe and America: Timing and Mechanisms," NBER Historical Working Papers 0016, National Bureau of Economic Research, Inc.
    44. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, pages 443-477.
    45. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, pages 325-366.
    46. Tsoukis, Christopher & Miller, Nigel James, 2008. "Learning, scale effects, and (very) long-run growth," Economic Modelling, Elsevier, vol. 25(3), pages 446-462, May.
    47. Alonso, William, 1980. "Population as a System in Regional Development," American Economic Review, American Economic Association, vol. 70(2), pages 405-409, May.
    48. Gebhard Kirchgässner, 2007. "Öffentliche Investitionen und Infrastrukturleistungen bei knappen Staatsfinanzen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(s1), pages 1-5, April.
    49. Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
    50. Robert W. Hahn & Paul C. Tetlock, 2008. "Has Economic Analysis Improved Regulatory Decisions?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 67-84, Winter.
    51. Michael Kosfeld & Armin Falk, 2006. "The Hidden Costs of Control," American Economic Review, American Economic Association, vol. 96(5), pages 1611-1630, December.
    52. Harry Seldadyo & Emmanuel Pandu Nugroho & Jakob de Haan, 2007. "Governance and Growth Revisited," Kyklos, Wiley Blackwell, vol. 60(2), pages 279-290, May.
    53. repec:dau:papers:123456789/12479 is not listed on IDEAS
    54. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472 Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Gas taxes are still the best option to reduce CO2 emissions
      by Economic Logician in Economic Logic on 2009-10-06 19:01:00

    More about this item

    Keywords

    CO2 emissions; road transport; fuel efficiency regulation; gasoline tax;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Economic Logic blog

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sie:siegen:133-09. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael Gail). General contact details of provider: http://edirc.repec.org/data/fwsiede.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.