The Effects of Regulation in the Presence of Multiple Unpriced Externalities: Evidence from the Transportation Sector
41 Pages Posted: 17 Feb 2013
Date Written: February 16, 2013
In transportation systems with unpriced congestion, allowing single-occupant low-emission vehicles in high occupancy vehicle (HOV) lanes to encourage their adoption exacerbates congestion costs for carpoolers. The resulting welfare effects of the policy are negative, with environmental benefits overwhelmingly dominated by the increased congestion costs. Exploiting the introduction of the Clean Air Vehicle Stickers policy in California with a regression discontinuity design, our results imply a best-case cost of $124 per ton of reductions in greenhouse gases, $606,000 dollars per ton of nitrogen oxides reduction, and $505,000 dollars per ton of hydrocarbon reduction, exceeding those of other options readily available to policymakers.
Keywords: Hybrid Vehicles, Regression Discontinuity, Air Pollution, congestion
JEL Classification: H23, R41, R48, Q52, Q58
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