New vehicle feebates

Nicholas Rivers and Brandon Schaufele

Canadian Journal of Economics, 2017, vol. 50, issue 1, 201-232

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.

JEL-codes: D49 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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