To Rebate or Not to Rebate: Fuel Economy Standards vs. Feebates?
Isis Durrmeyer () and
No 16-732, TSE Working Papers from Toulouse School of Economics (TSE)
We compare the welfare effects in equilibrium of two environmental regulations that aim at increasing the new cars fleet’s average fuel efficiency: the fuel economy standards and the feebate policies. Maintaining the same environmental benefit and tax revenue, we simulate the implementation of each policy in France and the United States. Standard-type policies have larger negative welfare effects, up to 3.2 times those from the feebate. Effects on manufacturers are heterogeneous: some are better of under the standard regulation. The addition of a market to trade levels of fuel efficiency dominates the simple standard regulation but not always the feebate. We also consider the attribute-based standard, technological improvements, and the equivalence with fuel taxes as extensions.
Keywords: Environmental regulation; automobile market; structural model; policy simulations (search for similar items in EconPapers)
JEL-codes: C51 L50 Q51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-tre
Date: 2016-11, Revised 2017-05
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:31175
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