To Rebate or Not to Rebate: Fuel Economy Standards Versus Feebates

41 Pages Posted: 11 Dec 2018

See all articles by Isis Durrmeyer

Isis Durrmeyer

University of Toulouse 1 - Toulouse School of Economics (TSE)

Mario Samano

HEC Montreal

Date Written: December 2018

Abstract

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 each policy in France and the US. Standard‐type policies have larger negative welfare effects, up to 1.7 times those from the feebate. Effects on manufacturers are heterogeneous: some are better off under the feebate. A market to trade levels of fuel efficiency dominates the simple standard regulation and the feebate. We also consider the attribute‐based standard and technological improvements.

Suggested Citation

Durrmeyer, Isis and Samano, Mario, To Rebate or Not to Rebate: Fuel Economy Standards Versus Feebates (December 2018). The Economic Journal, Vol. 128, Issue 616, pp. 3076-3116, 2018. Available at SSRN: https://ssrn.com/abstract=3298979 or http://dx.doi.org/10.1111/ecoj.12555

Isis Durrmeyer (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

21 allée de Brienne
Toulouse Cedex, F-31042
France

Mario Samano

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

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