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New vehicle feebates

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  • Nicholas Rivers
  • Brandon Schaufele

Abstract

New vehicle feebate programs encourage improved fleet-wide vehicle fuel efficiency; yet analyses of these policies have been limited to ad hoc proposals. In this paper, we exploit an extensive, multi-year dataset which includes more than 16 million observations to evaluate the welfare implications of a long-standing vehicle feebate program in the Canadian province of Ontario. We: (1) show that second-best optimal feebates can be written as a function of new vehicle Pigouvian taxes; (2) find that Ontario's feebate program was welfare-enhancing relative to a no feebate scenario but that a second-best optimal benchmark would have yielded additional welfare while reducing fleet-wide emissions; and (3) find that Ontarian consumers responded asymmetrically to fees versus rebates.

Suggested Citation

  • Nicholas Rivers & Brandon Schaufele, 2017. "New vehicle feebates," Canadian Journal of Economics, Canadian Economics Association, vol. 50(1), pages 201-232, February.
    • Handle: RePEc:cje:issued:v:50:y:2017:i:1:p:201-232
    DOI: 10.1111/caje.12255
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    Cited by:

    1. Rivers, Nicholas & Schaufele, Brandon, 2017. "Gasoline price and new vehicle fuel efficiency: Evidence from Canada," Energy Economics, Elsevier, vol. 68(C), pages 454-465.
    2. Alberini, Anna & Bareit, Markus & Filippini, Massimo & Martinez-Cruz, Adan L., 2018. "The impact of emissions-based taxes on the retirement of used and inefficient vehicles: The case of Switzerland," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 234-258.
    3. Sheldon, Tamara L. & Dua, Rubal, 2021. "How responsive is Saudi new vehicle fleet fuel economy to fuel-and vehicle-price policy levers?," Energy Economics, Elsevier, vol. 97(C).
    4. Gulati, Sumeet & McAusland, Carol & Sallee, James M., 2017. "Tax incidence with endogenous quality and costly bargaining: Theory and evidence from hybrid vehicle subsidies," Journal of Public Economics, Elsevier, vol. 155(C), pages 93-107.
    5. Randall Wigle, 2019. "The Economic Case for EV Supports? Or: Network Effects, EV Pessimism and EV Supports," LCERPA Working Papers ec0123, Laurier Centre for Economic Research and Policy Analysis, revised 23 Oct 2019.

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