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New vehicle feebates

Author

Listed:
  • Nicholas Rivers
  • Brandon Schaufele
Abstract
New vehicle feebate programs encourage improved fleet‐wide vehicle fuel efficiency; yet analyses of these policies have been limited to ad hoc proposals. In this paper, we exploit an extensive, multi‐year dataset which includes more than 16 million observations to evaluate the welfare implications of a long‐standing vehicle feebate program in the Canadian province of Ontario. We: (1) show that second‐best optimal feebates can be written as a function of new vehicle Pigouvian taxes; (2) find that Ontario's feebate program was welfare‐enhancing relative to a no feebate scenario but that a second‐best optimal benchmark would have yielded additional welfare while reducing fleet‐wide emissions; and (3) find that Ontarian consumers responded asymmetrically to fees versus rebates. Le programme de taxation avec remise pour les nouveaux véhicules. Les programmes de taxation avec remise pour les nouveaux véhicules encouragent l'amélioration de l'efficacité de l'utilisation de l'essence au niveau de toute la flotte de véhicules; cependant l'analyse de ces politiques a été limitée à des propositions ad hoc. Dans ce texte, les auteurs utilisent une banque de données extensives et pluriannuelles de plus de 16 millions d'observations pour évaluer les implications pour le bien‐être d'un programme de taxation avec remise bien en place dans la province de l'Ontario au Canada. On montre (1) que des remises optimales de second ordre peuvent être définies comme une fonction d'une taxe pigouvienne sur les véhicules; (2) que le programme de remise de l'Ontario a augmenté le bien‐être par rapport à une situation où un tel programme n'aurait pas existé, mais qu'un programme correspondant à un optimum de second ordre de référence aurait engendré un niveau de bien‐être plus é levé tout en réduisant les émissions de toute la flotte; et (3) que les Ontariens ont répondu de manière asymétrique aux taxes et aux subventions.

Suggested Citation

  • Nicholas Rivers & Brandon Schaufele, 2017. "New vehicle feebates," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(1), pages 201-232, February.
    • Handle: RePEc:wly:canjec:v:50:y:2017:i:1:p:201-232
    DOI: 10.1111/caje.12255
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    Cited by:

    1. Rivers, Nicholas & Schaufele, Brandon, 2017. "Gasoline price and new vehicle fuel efficiency: Evidence from Canada," Energy Economics, Elsevier, vol. 68(C), pages 454-465.
    2. Alberini, Anna & Bareit, Markus & Filippini, Massimo & Martinez-Cruz, Adan L., 2018. "The impact of emissions-based taxes on the retirement of used and inefficient vehicles: The case of Switzerland," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 234-258.
    3. Sheldon, Tamara L. & Dua, Rubal, 2021. "How responsive is Saudi new vehicle fleet fuel economy to fuel-and vehicle-price policy levers?," Energy Economics, Elsevier, vol. 97(C).
    4. Gulati, Sumeet & McAusland, Carol & Sallee, James M., 2017. "Tax incidence with endogenous quality and costly bargaining: Theory and evidence from hybrid vehicle subsidies," Journal of Public Economics, Elsevier, vol. 155(C), pages 93-107.
    5. Randall Wigle, 2019. "The Economic Case for EV Supports? Or: Network Effects, EV Pessimism and EV Supports," LCERPA Working Papers ec0123, Laurier Centre for Economic Research and Policy Analysis, revised 23 Oct 2019.

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    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other

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