 Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market2014 Papers from Job Market Papers Abstract: Emission standards are one of the major policy tools to reduce greenhouse gas emissions from transportation. The welfare e¤ects from this type of regulation depend on how  firms choose to abate emissions: by changing relative prices, by downsizing their flÂeet or by adopting technology. This paper studies the response of fi rms to a new emission standard in the European car market using panel data covering 1998-2011. The data show that  firms choose to comply with the regulation by adopting new technology. To evaluate the welfare effects of the regulation I estimate a structural model using data from before the policy announcement and explicitly test the ability of the model to explain the observed responses. I  find that, because the abatement is done by technology adoption, consumer welfare increases and overall welfare effects depend on market failures in the technology market. The design of the regulation matters to induce technology adoption. JEL-codes: H23 L62 Q48 R48 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:jmp:jm2014:pre327 Access Statistics for this paper More papers in 2014 Papers from Job Market Papers |
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