To Rebate or Not to Rebate: Fuel Economy Standards vs. Feebates?

Isis Durrmeyer and Mario Samano

No 16-732, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: 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)
Date: 2016-11, Revised 2017-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:31175

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