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

Durrmeyer, Isis and Samano, Mario (2018) To Rebate or Not to Rebate: Fuel Economy Standards vs. Feebates? The Economic Journal, 128 (616). pp. 3076-3116.

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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.

Item Type: Article
Language: English
Date: December 2018
Refereed: Yes
Uncontrolled Keywords: Environmental regulation, automobile market, structural model, policy simulations
JEL Classification: C51 - Model Construction and Estimation
L50 - General
Q51 - Valuation of Environmental Effects
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 May 2018 14:07
Last Modified: 07 Sep 2020 14:10
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