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Are Fuel Economy Standards Regressive?
- Source :
- Journal of the Association of Environmental and Resource Economists; March 2019, Vol. 6 Issue: 1 pS37-S63, 27p
- Publication Year :
- 2019
-
Abstract
- Despite widespread agreement that a carbon tax would be more efficient, many countries use fuel economy standards to reduce transportation-related carbon dioxide emissions. We pair a simple model of the automakers’ profit maximization problem with unusually rich nationally representative data on vehicle registrations to estimate the distributional impact of US fuel economy standards. The key insight from the model is that fuel economy standards impose a constraint on automakers that creates an implicit subsidy for fuel-efficient vehicles and an implicit tax for fuel-inefficient vehicles. Moreover, when these obligations are tradable, permit prices make it possible to quantify the exact magnitude of these implicit subsidies and taxes. We use the model to determine which vehicles are most subsidized and taxed, and we compare the pattern of ownership of these vehicles between high- and low-income census tracts. Finally, we compare these distributional impacts with existing estimates in the literature for a carbon tax.
Details
- Language :
- English
- ISSN :
- 23335955 and 23335963
- Volume :
- 6
- Issue :
- 1
- Database :
- Supplemental Index
- Journal :
- Journal of the Association of Environmental and Resource Economists
- Publication Type :
- Periodical
- Accession number :
- ejs47590200
- Full Text :
- https://doi.org/10.1086/701187