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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%.

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File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-14.pdf
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Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number XREAP2011-14.

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Length: 40 pages
Date of creation: Oct 2011
Date of revision: Oct 2011
Handle: RePEc:xrp:wpaper:xreap2011-14
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