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Do policy incentives affect the environmental impact of private car use? Evidence from a sample of large cities

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  • Keiko Hirota
  • Jacques Poot

Abstract

In this paper we study the effectiveness of tax incentives and public transportation prices on the environmental impact of private motor vehicle use in OECD countries and in some non-OECD countries in Asia. We develop a model of energy consumption and CO2 emission by private motor vehicles in relation to private transportation infrastructure, public transportation prices, traffic conditions, the user cost of cars, and the income of car users. The user cost of cars is decomposed into acquisition, ownership and running cost. Each component is split into a tax/subsidy segment and a resource cost segment. Our model is estimated with data from 49 large cities, i.e. 40 from OECD countries and 9 from non-OECD countries in Asia. Structural differences in model outcomes between these two sets of countries are identified. Our results suggest that an incentive-based system that rewards higher environmental performance, such as differential tax rates by vehicle age, can be effective.

Suggested Citation

  • Keiko Hirota & Jacques Poot, 2003. "Do policy incentives affect the environmental impact of private car use? Evidence from a sample of large cities," ERSA conference papers ersa03p493, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa03p493
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    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/493.pdf
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    1. Timilsina, Govinda R. & Dulal, Hari B., 2008. "Fiscal policy instruments for reducing congestion and atmospheric emissions in the transport sector : a review," Policy Research Working Paper Series 4652, The World Bank.
    2. Yasser Ammar AL-Rawi & Mohammed Harith Imlus & Yusri Yusup & Sofri Bin Yahya, 2018. "The Optimal Progressive Tax Policy to Reduced Vehicles Externalities," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 8(8), pages 265-276, August.
    3. Hössinger, Reinhard & Link, Christoph & Sonntag, Axel & Stark, Juliane, 2017. "Estimating the price elasticity of fuel demand with stated preferences derived from a situational approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 154-171.
    4. Shaw, Charles, 2020. "Econometric Analysis of Demand for Petrol in India, 1966-2019," MPRA Paper 104797, University Library of Munich, Germany.
    5. Tapio, Petri & Banister, David & Luukkanen, Jyrki & Vehmas, Jarmo & Willamo, Risto, 2007. "Energy and transport in comparison: Immaterialisation, dematerialisation and decarbonisation in the EU15 between 1970 and 2000," Energy Policy, Elsevier, vol. 35(1), pages 433-451, January.
    6. Tapio, Petri, 2005. "Towards a theory of decoupling: degrees of decoupling in the EU and the case of road traffic in Finland between 1970 and 2001," Transport Policy, Elsevier, vol. 12(2), pages 137-151, March.
    7. Yasser A. Al-Rawi & Mohammed Harith Imlus & Yusri Yusup & Sofri Bin Yahya, 2021. "Factors affecting vehicle exhaust emissions, driver motivations as a mediator," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 361-407, April.

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