On the relevance of differentiated car purchase taxes in light of the rebound effect

Bénédicte Meurisse ()

Working Papers from Chaire Economie du climat

Abstract: The significant weight of CO2 emissions resulting from car use in the total of CO2 emissions is enough of a signal to set up policy tools aiming at reducing such emissions. This paper investigates the effects of setting a penalty on the purchase of high emitting cars (i.e. a Malus). With static comparative analyses of a basic model of consumer’s behaviour facing two alternatives: a clean and a dirty vehicles, we essentially find that a rebound effect does not necessarily accompany the reduction in the average fuel consumption per kilometre resulting from the implementation of a differentiated car purchase tax such as a Malus scheme. This is because the improvement of the fuel-efficiency is achieved thanks to a new distribution of vehicles over the fleet, and not solely thanks to a reduction of the vehicles’ fuel consumption. Thereby, it happens that we observe a rebound effect only under certain conditions pertaining to the characteristics of the vehicles that make up the fleet (i.e. their unit consumption and market price). We also show that, from the moment that a rebound effect occurs, the higher the amount of Malus, the higher the rebound effect. It implicitly means that because of the rebound effect, the higher the pricing scheme, the less efficient the purchase tax.

Keywords: Car purchase decision; Car use; CO2 emissions; Rebound effect; Penalty on car purchase. (search for similar items in EconPapers)
JEL-codes: D11 H31 Q58 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2015
New Economics Papers: this item is included in nep-ene, nep-env and nep-tre
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http://www.chaireeconomieduclimat.org/RePEc/cec/wp ... 2015-12-Meurisse.pdf First version, 2015 (application/pdf)

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Working Paper: On the relevance of differentiated car purchase taxes in light of the rebound effect (2015)
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