Welfare Implications of Automobile Feebates: A Simulation Analysis
Date Issued
January 5, 2012
Abstract
Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet evidence on its effectiveness and economic impact is limited. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to low-carbon automobiles. We estimate demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. We find that revenue-neutral feebate schemes are welfare-decreasing; welfare can only increase with schemes that increase tax revenues at the expense of consumer and producer surplus.
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Designing Carbon Taxation Schemes for Automobiles.pdf
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336.92 KB
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