Abatement strategies and the cost of environmental regulation: emission standards on the European car market

Mathias Reynaert

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Abstract: This paper studies the introduction of an EU-wide emission standard on the automobile market. Using panel data from 1998-2011, I find that firms decreased emission ratings by 14%. Firms use technology adoption and gaming of emission tests to decrease emissions, rather than shifting the sales mix or downsizing. I find that the standard missed its emission target, and from estimating a structural model, I find that the standard was not welfare improving. The political environment in the EU shaped the design and weak enforcement and resulted in firms' choices for abatement by technology adoption and gaming.

Keywords: Environmental regulation; Compliance; Carbon emissions; Automobiles; Fuel economy (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg, nep-res and nep-tre
Note: View the original document on HAL open archive server: https://hal.science/hal-03369684
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Citations: View citations in EconPapers (18)

Published in The Review Of Economic Studies, 2021, 88 (1), pp.454-488. ⟨10.1093/restud/rdaa058⟩

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Related works:
Journal Article: Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market (2021)
Working Paper: Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market (2019)
Working Paper: Abatement strategies and the cost of environmental regulation: Emission standards on the European car market (2014)
Working Paper: Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03369684

DOI: 10.1093/restud/rdaa058

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