Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency

Juan Jiménez González, Jordi Perdiguero and Carmen García Galindo

No XREAP2011-14, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: During the recent period of economic crisis, many countries have introduced scrappage schemes to boost the sale and production of vehicles, particularly of vehicles designed to pollute less. In this paper, we analyze the impact of a particular scheme in Spain (Plan2000E) on vehicle prices and sales figures as well as on the reduction of polluting emissions from vehicles on the road. We considered the introduction of this scheme an exogenous policy change and because we could distinguish a control group (non-subsidized vehicles) and a treatment group (subsidized vehicles), before and after the introduction of the Plan, we were able to carry out our analysis as a quasi-natural experiment. Our study reveals that manufacturers increased vehicle prices by the same amount they were granted through the Plan (1,000 €). In terms of sales, econometric estimations revealed an increase of almost 5% as a result of the implementation of the Plan. With regard to environmental efficiency, we compared the costs (inverted quantity of money) and the benefits of the program (reductions in polluting emissions and additional fiscal revenues) and found that the Plan would only be beneficial if it boosted demand by at least 30%.

Keywords: Subsidies; Automobile sector; Difference-in-Difference estimator; Green policies. (search for similar items in EconPapers)
JEL-codes: H23 L52 L62 Q58 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011-10, Revised 2011-10
New Economics Papers: this item is included in nep-ene and nep-env
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-14.pdf First version, 2011 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-14.pdf Revised version, 2011 (application/pdf)

Related works:
Journal Article: Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency (2016)
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