Designing Policies to Make Cars Greener: A Review of the Literature

Soren Anderson and James Sallee

No 22242, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We review what is known about the economic efficiency of fuel taxes relative to efficiency standards aimed at mitigating environmental externalities from automobiles. We present a simplified model of car choice that allows us to emphasize the relationships between fuel economy, other car attributes, and miles traveled. We focus on greenhouse gas emissions, although we note how other environmental externalities affect our conclusions. Our main conclusion—that standards are substantially less efficient than a fuel tax—is already familiar. Less familiar are points we make about the relative importance of the rebound effect, on the effects of attribute-based policies, and the implications of behavioral biases. We point to areas where we believe future research can have the greatest contribution, including work on uncertainty, heterogeneity, and empirical work in low and middle-income countries.

JEL-codes: H23 Q48 Q54 (search for similar items in EconPapers)
Date: 2016-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-his, nep-pbe and nep-tre
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Published as Soren T. Anderson & James M. Sallee, 2016. "Designing Policies to Make Cars Greener," Annual Review of Resource Economics, vol 8(1).

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