Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient?

Mark R. Jacobsen, James M. Sallee, Joseph Shapiro and Arthur A. van Benthem

No 10132, CESifo Working Paper Series from CESifo

Abstract: What is a feasible and efficient policy to regulate air pollution from vehicles? A Pigouvian tax is technologically infeasible. Most countries instead rely on exhaust standards that limit air pollution emissions per mile for new vehicles. We assess the effectiveness and efficiency of these standards, which are the centerpiece of US Clean Air Act regulation of transportation, and counterfactual policies. We show that the air pollution emissions per mile of new US vehicles has fallen spectacularly, by over 99 percent, since standards began in 1967. Several research designs with a half century of data suggest that exhaust standards have caused most of this decline. Yet exhaust standards are not cost-effective in part because they fail to encourage scrap of older vehicles, which account for the majority of emissions. To study counterfactual policies, we develop an analytical and a quantitative model of the vehicle fleet. Analysis of these models suggests that tighter exhaust standards increase social welfare and that increasing registration fees on dirty vehicles yields even larger gains by accelerating scrap, though both reforms have complex effects on inequality.

JEL-codes: H21 H23 H70 Q50 R40 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env, nep-pbe, nep-pub and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp10132.pdf (application/pdf)

Related works:
Journal Article: Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? (2023)
Working Paper: Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? (2023)
Working Paper: Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? (2022)
Working Paper: Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? (2022)
Working Paper: Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? (2022)
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:ces:ceswps:_10132

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().