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

Durrmeyer Isis | Zendy; Samano Mario | Zendy

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

Author(s) -

Durrmeyer Isis,

Samano Mario

Publication year - 2018

Publication title -

the economic journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.683

H-Index - 160

eISSN - 1468-0297

pISSN - 0013-0133

DOI - 10.1111/ecoj.12555

Subject(s) - economics , welfare , revenue , tax revenue , general equilibrium theory , environmental policy , natural resource economics , microeconomics , public economics , market economy , finance

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.

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