Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market

Reynaert, Mathias (2015) Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market. , Toulouse

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Official URL: http://tse-fr.eu/pub/29851

Abstract

Emission standards are one of the major policy tools to reduce greenhouse gas emissions from transportation. The welfare effects from this type of regulation depend on how firms choose to abate emissions: by changing relative prices, by downsizing their feet or by adopting technology. This paper studies the response of firms 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.

Item Type: Monograph (Working Paper)
Language: English
Date: 2015
Place of Publication: Toulouse
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 05 Nov 2015 15:11
Last Modified: 21 Mar 2018 13:37
OAI ID: oai:tse-fr.eu:29851
URI: http://publications.ut-capitole.fr/id/eprint/18612

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