IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

The environmental impact of vehicle circulation tax reform in Germany

Listed author(s):
  • Malina, Christiane
Registered author(s):

    A core political strategy for reducing greenhouse gas emissions from road transportation in Germany is to incentivize the purchase of motor vehicles with relatively low tailpipe CO2 emissions. Consequently, since mid-2009, owners of new cars in Germany face an annual vehicle circulation tax that is partially levied according to vehicles' CO2 emission index. In this paper, I estimate the effect of CO2 -based vehicle circulation taxation in Germany on annual CO2 combustion emissions from passenger cars and CO2 climate costs using a nested logit approach on a novel panel-dataset containing registration, cost and vehicle characteristic information on approximately 7,000 unique vehicle models and approximately 19.5 million new vehicle registrations in Germany from 2007 to 2013. This approach first yields vehicle model specific estimates for the elasticity of new vehicle registrations with regard to the circulation tax. These elasticities are used to estimate changes in new vehicle registrations by model, which are then combined with model-specific CO2 emission factors and segment-specific annual distances driven to yield total emission changes attributable to the change in vehicle circulation tax. Finally, physical changes in emissions are converted into changes in monetary climate damages. Uncertainty in the elasticity of new vehicle registrations by segment with regard to vehicle circulation tax, the fuel economy and corresponding CO2 emission indices of vehicles, distances traveled by market segment, and in the monetary damages resulting from CO2 emissions are propagated through the analysis. Overall I find statistically significant, but relatively small reductions in CO2 emissions and climate costs due to the change in taxation: When simulating the ceteris paribus effect of the most stringent taxation regime implemented in 2014 on the pre-tax change models available in 2008, median registrations are estimated to decrease by approx. 9,500 vehicles, or 0.3 per cent of total new registrations. In addition, changes in registrations of individual vehicle models within each market segment lead to a relatively small reduction of segment- specific CO2 emission indices (0.03 to 0.1 per cent across segments). The reduction in new registrations and reduction in CO2 emission indices decrease median CO2 combustion emissions from newly registered vehicles by 35,000 t (90 per cent confidence interval: 31.000 to 39.000 t), and climate costs by € 1.1 Million (90 per cent confidence interval: € 0.1 to 2.2 Million), or 0.4 per cent of total CO2 emissions and climate costs from newly registered cars.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: https://www.econstor.eu/bitstream/10419/145114/1/866294066.pdf
    Download Restriction: no

    Paper provided by University of Münster, Center of Applied Economic Research Münster (CAWM) in its series CAWM Discussion Papers with number 86.

    as
    in new window

    Length:
    Date of creation: 2016
    Handle: RePEc:zbw:cawmdp:86n
    Contact details of provider: Postal:
    02 51 / 83-2 29 10

    Phone: 02 51 / 83-2 29 10
    Fax: 02 51 / 83-2 83 99
    Web page: http://www.wiwi.uni-muenster.de/cawm/

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Jean‐Pierre Dubé & Jeremy T. Fox & Che‐Lin Su, 2012. "Improving the Numerical Performance of Static and Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation," Econometrica, Econometric Society, vol. 80(5), pages 2231-2267, 09.
    2. Robert C. Feenstra & James A. Levinsohn, 1995. "Estimating Markups and Market Conduct with Multidimensional Product Attributes," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 19-52.
    3. Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, vol. 17(2), pages 201-227, November.
    4. Ntziachristos, L. & Mellios, G. & Tsokolis, D. & Keller, M. & Hausberger, S. & Ligterink, N.E. & Dilara, P., 2014. "In-use vs. type-approval fuel consumption of current passenger cars in Europe," Energy Policy, Elsevier, vol. 67(C), pages 403-411.
    5. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, September.
    6. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-1177, September.
    7. Arie Beresteanu & Shanjun Li, 2011. "Gasoline Prices, Government Support, And The Demand For Hybrid Vehicles In The United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 161-182, 02.
    8. Cardell, N. Scott, 1997. "Variance Components Structures for the Extreme-Value and Logistic Distributions with Application to Models of Heterogeneity," Econometric Theory, Cambridge University Press, vol. 13(02), pages 185-213, April.
    9. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    10. Turrentine, Tom & Kurani, Kenneth S, 2007. "Car buyers and fuel economy?," Institute of Transportation Studies, Working Paper Series qt56x845v4, Institute of Transportation Studies, UC Davis.
    11. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, vol. 33(6), pages 757-775, April.
    12. Steven Berry & James Levinsohn & Ariel Pakes, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 68-105, February.
    13. Richard Tol, 2012. "On the Uncertainty About the Total Economic Impact of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(1), pages 97-116, September.
    14. Martin Achtnicht, 2012. "German car buyers’ willingness to pay to reduce CO 2 emissions," Climatic Change, Springer, vol. 113(3), pages 679-697, August.
    15. Ashok Kaul & Gregor Pfeifer & Stefan Witte, 2012. "The incidence of Cash for Clunkers: an analysis of the 2009 car scrappage scheme in Germany," ECON - Working Papers 068, Department of Economics - University of Zurich.
    16. Klier, Thomas & Linn, Joshua, 2012. "Using Vehicle Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden," Discussion Papers dp-12-34, Resources For the Future.
    17. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    18. Bresnahan, Timothy F & Schmalensee, Richard, 1987. "The Empirical Renaissance in Industrial Economics: An Overview," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 371-378, June.
    19. Meghan Busse & Jorge Silva-Risso & Florian Zettelmeyer, 2006. "$1,000 Cash Back: The Pass-Through of Auto Manufacturer Promotions," American Economic Review, American Economic Association, vol. 96(4), pages 1253-1270, September.
    20. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2014. "Welfare Implications of Car Feebates: A Simulation Analysis," Economic Journal, Royal Economic Society, vol. 124(578), pages 420-443, 08.
    21. Laura Grigolon & Frank Verboven, 2014. "Nested Logit or Random Coefficients Logit? A Comparison of Alternative Discrete Choice Models of Product Differentiation," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 916-935, December.
    22. Kressmann, Frank & Sirgy, M. Joseph & Herrmann, Andreas & Huber, Frank & Huber, Stephanie & Lee, Dong-Jin, 2006. "Direct and indirect effects of self-image congruence on brand loyalty," Journal of Business Research, Elsevier, vol. 59(9), pages 955-964, September.
    23. Fischer, Carolyn, 2008. "Comparing flexibility mechanisms for fuel economy standards," Energy Policy, Elsevier, vol. 36(8), pages 3106-3114, August.
    24. Kenneth L. Judd & Ben Skrainka, 2011. "High performance quadrature rules: how numerical integration affects a popular model of product differentiation," CeMMAP working papers CWP03/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    25. Frondel, Manuel & Ritter, Nolan & Vance, Colin, 2012. "Heterogeneity in the rebound effect: Further evidence for Germany," Energy Economics, Elsevier, vol. 34(2), pages 461-467.
    26. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    27. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    28. Zachariadis, Theodoros, 2013. "Gasoline, diesel and climate policy implications—Insights from the recent evolution of new car sales in Germany," Energy Policy, Elsevier, vol. 54(C), pages 23-32.
    29. Turrentine, Thomas S. & Kurani, Kenneth S., 2007. "Car buyers and fuel economy?," Energy Policy, Elsevier, vol. 35(2), pages 1213-1223, February.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:zbw:cawmdp:86n. 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: (ZBW - German National Library of Economics)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.