IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/4695.html
   My bibliography  Save this paper

Transportation fuel use, technology and standards: The role of credibility and expectations

Author

Listed:
  • Eskeland, Gunnar S.
  • Mideksa, Torben K.

Abstract

There is a debate among policy analysts about whether fuel taxes alone are the most effective policy to reduce fuel use by motorists, or whether to also use mandatory standards for fuel efficiency. A problem with a policy mandating fuel economy standards is the"rebound effect,"whereby owners with more efficient vehicles increase vehicle usage. If an important part of negative externalities from transport are associated with vehicle kilometers (accidents, congestion, road wear) rather than fuel consumption, the rebound effect increases negative externalities. Taxes and standards should be mutually supportive because fuel taxes often meet political resistance. Over time, fuel efficiency standards can reduce political resistance to fuel taxes. Thus, by raising fuel efficiency standards now, politicians may be able to pursue higher fuel tax paths in the future. Another argument in support of fuel efficiency standards and similar policies is that standards to a greater extent than taxes can be announced in advance and still be credible and change the behavior of inventors, firms, and other agents in society. A further argument is that standards can be used with greater force and commitment through international coordination.

Suggested Citation

  • Eskeland, Gunnar S. & Mideksa, Torben K., 2008. "Transportation fuel use, technology and standards: The role of credibility and expectations," Policy Research Working Paper Series 4695, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4695
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/08/19/000158349_20080819140748/Rendered/PDF/WPS4695.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Harstad, Bård & Eskeland, Gunnar S., 2010. "Trading for the future: Signaling in permit markets," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 749-760, October.
    2. Lucas W. Davis, 2008. "The Effect of Driving Restrictions on Air Quality in Mexico City," Journal of Political Economy, University of Chicago Press, vol. 116(1), pages 38-81, February.
    3. Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-147, March.
    4. Eskeland, Gunnar S. & Feyzioglu, Tarhan N., 1997. "Is demand for polluting goods manageable? An econometric study of car ownership and use in Mexico," Journal of Development Economics, Elsevier, vol. 53(2), pages 423-445, August.
    5. Eskeland, Gunnar S & Feyzioglu, Tarhan, 1997. "Rationing Can Backfire: The "Day without a Car" in Mexico City," World Bank Economic Review, World Bank Group, vol. 11(3), pages 383-408, September.
    6. Gunnar S. Eskeland & Jian Xie, 1998. "Acting Globally while Thinking Locally: Is the Global Environment Protected by Transport Emission Control Programs?," Journal of Applied Economics, Universidad del CEMA, vol. 1, pages 385-411, November.
    7. Parry, Ian & Fischer, Carolyn & Harrington, Winston, 2004. "Should Corporate Average Fuel Economy (CAFE) Standards Be Tightened?," Discussion Papers dp-04-53, Resources For the Future.
    8. Robert W. Crandall, 1992. "Policy Watch: Corporate Average Fuel Economy Standards," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 171-180, Spring.
    9. Parry, Ian W.H. & Sigman, Hilary & Walls, Margaret & Williams, Roberton C., III, 2005. "The Incidence of Pollution Control Policies," Discussion Papers 10651, Resources for the Future.
    10. Kopits, Elizabeth & Cropper, Maureen, 2003. "Traffic fatalities and economic growth," Policy Research Working Paper Series 3035, The World Bank.
    11. Yixin Dai & David Popp & Stuart Bretschneider, 2005. "Institutions and intellectual property: The influence of institutional forces on university patenting," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(3), pages 579-598.
    12. Henrik Hammar, Asa Lofgren and Thomas Sterner, 2004. "Political Economy Obstacles to Fuel Taxation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
    13. Nair, Santosh & Espey, Molly, 2004. "Automobile Fuel Economy: What is it Worth?," 2004 Annual meeting, August 1-4, Denver, CO 20102, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. John E. Kwoka, 1983. "The Limits of Market-Oriented Regulatory Techniques: The Case of Automotive Fuel Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 695-704.
    15. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
    16. Austin, David & Dinan, Terry, 2005. "Clearing the air: The costs and consequences of higher CAFE standards and increased gasoline taxes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 562-582, November.
    17. Parry, Ian W. H., 2004. "Comparing alternative policies to reduce traffic accidents," Journal of Urban Economics, Elsevier, vol. 56(2), pages 346-368, September.
    18. Eskeland, Gunnar S, 1994. "A Presumptive Pigovian Tax: Complementing Regulation to Mimic an Emissions Fee," World Bank Economic Review, World Bank Group, vol. 8(3), pages 373-394, September.
    19. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    20. repec:reg:rpubli:205 is not listed on IDEAS
    21. Don Fullerton & Li Gan, 2005. "Cost-Effective Policies to Reduce Vehicle Emissions," American Economic Review, American Economic Association, vol. 95(2), pages 300-304, May.
    22. James A. Kahn, 1986. "Gasoline Prices and the Used Automobile Market: A Rational Expectations Asset Price Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 323-339.
    23. Ye Feng & Don Fullerton & Li Gan, 2013. "Vehicle choices, miles driven, and pollution policies," Journal of Regulatory Economics, Springer, vol. 44(1), pages 4-29, August.
    24. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    25. Eskeland, Gunnar S & Jimenez, Emmanuel, 1992. "Policy Instruments for Pollution Control in Developing Countries," World Bank Research Observer, World Bank Group, vol. 7(2), pages 145-169, July.
    26. Robert B. Noland, 2004. "Motor Vehicle Fuel Efficiency and Traffic Fatalities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-22.
    27. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    28. Carolyn Fischer & Winston Harrington & Ian W.H. Parry, 2007. "Should Automobile Fuel Economy Standards be Tightened?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-30.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yan, Shiyu & Eskeland, Gunnar S., 2018. "Greening the vehicle fleet: Norway's CO2-Differentiated registration tax," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 247-262.
    2. Parry, Ian W.H. & Timilsina, Govinda R., 2009. "Pricing externalities from passenger transportation in Mexico city," Policy Research Working Paper Series 5071, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Parry, Ian W.H. & Timilsina, Govinda R., 2009. "Pricing externalities from passenger transportation in Mexico city," Policy Research Working Paper Series 5071, The World Bank.
    2. Eskeland, Gunnar S., 2000. "Externalities and production efficiency," Policy Research Working Paper Series 2319, The World Bank.
    3. Eskeland, Gunnar S., 2000. "Environmental protection and optimal taxation," Policy Research Working Paper Series 2510, The World Bank.
    4. Tscharaktschiew, Stefan, 2014. "Shedding light on the appropriateness of the (high) gasoline tax level in Germany," Economics of Transportation, Elsevier, vol. 3(3), pages 189-210.
    5. Junji Xiao & Xiaolan Zhou & Wei‐Min Hu, 2017. "Welfare Analysis Of The Vehicle Quota System In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(2), pages 617-650, May.
    6. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    7. Timilsina, Govinda R. & Dulal, Hari B., 2009. "A review of regulatory instruments to control environmental externalities from the transport sector," Policy Research Working Paper Series 4867, The World Bank.
    8. Stavins, Robert, 2005. "The Effects of Vintage-Differentiated Environmental Regulation," Working Paper Series rwp05-031, Harvard University, John F. Kennedy School of Government.
    9. Parry, Ian W.H., 2012. "Reforming the tax system to promote environmental objectives: An application to Mauritius," Ecological Economics, Elsevier, vol. 77(C), pages 103-112.
    10. Montag, Josef, 2015. "The simple economics of motor vehicle pollution: A case for fuel tax," Energy Policy, Elsevier, vol. 85(C), pages 138-149.
    11. Parry, Ian W.H. & Timilsina, Govinda R., 2010. "How should passenger travel in Mexico City be priced?," Journal of Urban Economics, Elsevier, vol. 68(2), pages 167-182, September.
    12. Shiau, Ching-Shin Norman & Michalek, Jeremy J. & Hendrickson, Chris T., 2009. "A structural analysis of vehicle design responses to Corporate Average Fuel Economy policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 814-828, November.
    13. Proost, Stef & Van Dender, Kurt, 2012. "Energy and environment challenges in the transport sector," Economics of Transportation, Elsevier, vol. 1(1), pages 77-87.
    14. Parry, Ian & Portney, Paul & Harrington, Winston & Gruenspecht, Howard, 2003. "The Economics of Fuel Economy Standards," Discussion Papers dp-03-44, Resources For the Future.
    15. Banzhaf, H. Spencer & Kasim, M. Taha, 2019. "Fuel consumption and gasoline prices: The role of assortative matching between households and automobiles," Journal of Environmental Economics and Management, Elsevier, vol. 95(C), pages 1-25.
    16. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    17. Ian W. H. Parry, 2005. "Is Pay-as-You-Drive Insurance a Better Way to Reduce Gasoline than Gasoline Taxes?," American Economic Review, American Economic Association, vol. 95(2), pages 288-293, May.
    18. Lawrence Goulder, 2007. "Distributional and Efficiency Impacts of Increased U.S. Gasoline Taxes," Discussion Papers 07-009, Stanford Institute for Economic Policy Research.
    19. Xiao, Junji & Ju, Heng, 2011. "The impacts of air-pollution motivated automobile consumption tax adjustments of China," MPRA Paper 27743, University Library of Munich, Germany.
    20. Eskeland, Gunnar*Chingying Kong, 1998. "Protecting the environment and the poor - a public goods framework applied to Indonesia," Policy Research Working Paper Series 1961, The World Bank.

    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:wbk:wbrwps:4695. 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: . General contact details of provider: https://edirc.repec.org/data/dvewbus.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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    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.