Welfare Implications of Automobile Feebates: A Simulation Analysis

30 Pages Posted: 18 Feb 2012 Last revised: 7 Jun 2013

See all articles by Adamos Adamou

Adamos Adamou

University of Cyprus - Department of Economics

Sofronis Clerides

University of Cyprus - Department of Economics; Centre for Economic Policy Research (CEPR); University of Bologna - Rimini Center for Economic Analysis (RCEA)

Theodoros Zachariadis

Cyprus University of Technology

Multiple version iconThere are 4 versions of this paper

Date Written: May 2013

Abstract

Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet evidence on its effectiveness and economic impact is limited. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to low-carbon automobiles. We estimate demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. We find that revenue-neutral feebate schemes are welfare-decreasing; welfare can only increase with schemes that increase tax revenues at the expense of consumer and producer surplus.

Keywords: CO2 emissions, feebates, environmental taxation, carbon taxation

JEL Classification: Q52, Q58, L92

Suggested Citation

Adamou, Adamos and Clerides, Sofronis and Zachariadis, Theodoros, Welfare Implications of Automobile Feebates: A Simulation Analysis (May 2013). Available at SSRN: https://ssrn.com/abstract=2006757 or http://dx.doi.org/10.2139/ssrn.2006757

Adamos Adamou

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
Nicosia, 1678
Cyprus

HOME PAGE: http://ucy.ac.cy/dir/el/component/comprofiler/userprofile/adamos

Sofronis Clerides

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
+35 7 2289 2450 (Phone)
+35 7 2289 2432 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

Theodoros Zachariadis (Contact Author)

Cyprus University of Technology ( email )

Dept. of Environmental Science & Technology
PO Box 50329
Limassol, 3603
Cyprus
+35725002304 (Phone)
+35725002667 (Fax)

HOME PAGE: http://www.cut.ac.cy/staff/t.zachariadis?languageId=1

Register to save articles to
your library

Register

Paper statistics

Downloads
90
Abstract Views
656
rank
125,591
PlumX Metrics