EconPapers    
Economics at your fingertips  
 

Do regulatory loopholes distort technical change? Evidence from new vehicle launches under the Japanese fuel economy regulation

Yoshifumi Konishi and Shunsuke Managi

Journal of Environmental Economics and Management, 2020, vol. 104, issue C

Abstract: Environmental regulation often creates regulatory loopholes that are not ideal in first-best settings. Such loopholes affect the marginal costs of alternative compliance strategies, leading to distortion in firm's compliance choice. We quantify the unintended effect of such loopholes on technical change in the Japanese automobile industry, using variant-level data on new vehicle launches. We employ a triple difference strategy, exploiting the two-fold treatment-control structures within each product segment, due to regulation-induced variations in the Japanese fuel economy standards over time. Our results indicate that regulation-induced differences in technical trade-offs have induced a distortion not only in product attributes but also in technical progress in fuel economy technology.

Keywords: Automobile; Triple difference; Energy policy; Fuel economy regulation; Ratchet effect; Regulatory loopholes; Technical change; Technology policy (search for similar items in EconPapers)
JEL-codes: D22 K32 L62 Q48 Q55 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069620301005
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:104:y:2020:i:c:s0095069620301005

DOI: 10.1016/j.jeem.2020.102377

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).

 
Page updated 2025-03-23
Handle: RePEc:eee:jeeman:v:104:y:2020:i:c:s0095069620301005