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

  • Keiko Hirota


  • Jacques Poot


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.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p493.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p493
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  1. Gerard de Jong & Hugh Gunn, 2001. "Recent Evidence on Car Cost and Time Elasticities of Travel Demand in Europe," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 35(2), pages 137-160, May.
  2. Robert Noland & William Cowart, 2000. "Analysis of Metropolitan Highway Capacity and the growth in vehicle miles of travel," Transportation, Springer, vol. 27(4), pages 363-390, December.
  3. Espey, Molly, 1996. "Watching the fuel gauge: An international model of automobile fuel economy," Energy Economics, Elsevier, vol. 18(1-2), pages 93-106, April.
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