Drivers’ response to fuel taxes and efficiency standards: evidence from Germany

Manuel Frondel and Colin Vance

Transportation, 2018, vol. 45, issue 3, No 13, 989-1001

Abstract: Abstract Using household travel diary data collected in Germany between 1997 and 2015, we employ an instrumental variable (IV) approach that enables us to consistently estimate both fuel price and efficiency elasticities. The aim is to gauge the relative impacts of fuel economy standards and fuel taxes on distance traveled. Our elasticity estimates indicate that higher fuel prices reduce driving to a substantial extent, though not to the same degree as higher fuel efficiency increases driving. This finding indicates an offsetting effect of fuel efficiency standards on the effectiveness of fuel taxation, calling into question the efficacy of the European Commission’s legislation to limit carbon dioxide emissions for new cars.

Keywords: Automobile travel; Instrumental variable approach; Rebound effect (search for similar items in EconPapers)
JEL-codes: D12 Q41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (17)

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DOI: 10.1007/s11116-017-9759-1

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