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Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency


  • Juan Luis Jiménez

    () (Universidad de Las Palmas de Gran Canaria. Facultad de Economía, Empresa y Turismo, Spain)

  • Jordi Perdiguero

    () (Departament de Política Econòmica. GiM-IREA. University of Barcelona. Spain)

  • Carmen García

    () (Universidad de Las Palmas de Gran Canaria. Facultad de Economía, Empresa y Turismo, Spain)


During the recent period of economic crisis, many countries have introduced scrappage schemes to boost the sale and production of vehicles, particularly of vehicles designed to pollute less. In this paper, we analyze the impact of a particular scheme in Spain (Plan2000E) on vehicle prices and sales figures as well as on the reduction of polluting emissions from vehicles on the road. We considered the introduction of this scheme an exogenous policy change and because we could distinguish a control group (non-subsidized vehicles) and a treatment group (subsidized vehicles), before and after the introduction of the Plan, we were able to carry out our analysis as a quasi-natural experiment. Our study reveals that manufacturers increased vehicle prices by the same amount they were granted through the Plan (1,000 €). In terms of sales, econometric estimations revealed an increase of almost 5% as a result of the implementation of the Plan. With regard to environmental efficiency, we compared the costs (inverted quantity of money) and the benefits of the program (reductions in polluting emissions and additional fiscal revenues) and found that the Plan would only be beneficial if it boosted demand by at least 30%.

Suggested Citation

  • Juan Luis Jiménez & Jordi Perdiguero & Carmen García, 2011. "Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency," Working Papers XREAP2011-14, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2011.
  • Handle: RePEc:xrp:wpaper:xreap2011-14

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    References listed on IDEAS

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    Cited by:

    1. Jordi Perdiguero & Juan Luis Jiménez, 2012. "“Policy options for the promotion of electric vehicles: a review”," IREA Working Papers 201208, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.
    2. repec:eee:pubeco:v:155:y:2017:i:c:p:93-107 is not listed on IDEAS
    3. Cantos-Sánchez, Pedro & Gutiérrez-i-Puigarnau, Eva & Mulalic, Ismir, 2015. "The impact of scrappage programs on the demand for new vehicles: Evidence from Spain," MPRA Paper 61224, University Library of Munich, Germany.

    More about this item


    Subsidies; Automobile sector; Difference-in-Difference estimator; Green policies.;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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