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Fuel taxation, emissions policy, and competitive advantage in the diffusion of European diesel automobiles
Author(s) -
Miravete Eugenio J.,
Moral María J.,
Thurk Jeff
Publication year - 2018
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12243
Subject(s) - diesel fuel , tariff , european union , international economics , economics , business , international trade , waste management , engineering
Economic integration agreements have significantly decreased import tariffs. We investigate whether national policies can be an effective replacement for tariffs to protect domestic industry. We show that (a) European fuel taxes and vehicle emissions policy favored diesel vehicles, a technology popular with European consumers but largely offered only by domestic automakers; (b) European automakers benefited from pro‐diesel fuel taxes and a lenient NO x emissions policy to earn significant profits from diesel cars; and (c) that both policies amounted to significant nontariff trade policies equivalent to an import tariff between two to three times the official rate.