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Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency

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  • Jiménez, Juan Luis
  • Perdiguero, Jordi
  • García, Carmen

Abstract

During the recent period of economic crisis, many countries have introduced scrappage schemes to boost the sale and production of vehicles, particularly of vehicles designed to pollute less. In this paper, the authors analyze the impact of a particular scheme in Spain (Plan2000E) on vehicle prices and sales figures as well as on the reduction of polluting emissions from vehicles on the road. They considered the introduction of this scheme an exogenous policy change and because they could distinguish a control group (both non-subsidized vehicles and the same vehicles in Slovenia) and a treatment group (subsidized vehicles), before and after the introduction of the Plan, the authors were able to carry out their analysis as a quasi-natural experiment. The study reveals that manufacturers increased vehicle prices by 600 € on average. In terms of sales, econometric estimations revealed that the Plan would not cause any increase in sales. With regard to environmental efficiency, comparing the costs (invested quantity of money) and the benefits of the program (reductions in polluting emissions and additional fiscal revenues) and it has been found that the Plan would only be beneficial if it boosted demand by at least 30%.

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  • Jiménez, Juan Luis & Perdiguero, Jordi & García, Carmen, 2016. "Evaluation of subsidies programs to sell green cars: Impact on prices, quantities and efficiency," Transport Policy, Elsevier, vol. 47(C), pages 105-118.
    • Handle: RePEc:eee:trapol:v:47:y:2016:i:c:p:105-118
    DOI: 10.1016/j.tranpol.2016.01.002
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    Cited by:

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    2. Sylwia Słupik & Joanna Kos-Łabędowicz & Joanna Trzęsiok, 2021. "How to Encourage Energy Savings Behaviours? The Most Effective Incentives from the Perspective of European Consumers," Energies, MDPI, vol. 14(23), pages 1-25, November.
    3. Jordi Perdiguero & Juan Luis Jiménez, 2012. "“Policy options for the promotion of electric vehicles: a review”," IREA Working Papers 201208, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.
    4. Ovaere, Marten & Proost, Stef, 2022. "Cost-effective reduction of fossil energy use in the European transport sector: An assessment of the Fit for 55 Package," Energy Policy, Elsevier, vol. 168(C).
    5. Galarraga, Ibon & Kallbekken, Steffen & Silvestri, Alessandro, 2020. "Consumer purchases of energy-efficient cars: How different labelling schemes could affect consumer response to price changes," Energy Policy, Elsevier, vol. 137(C).
    6. Cantos-Sánchez, Pedro & Gutiérrez-i-Puigarnau, Eva & Mulalic, Ismir, 2018. "The impact of scrappage programmes on the demand for new vehicles: Evidence from Spain," Research in Transportation Economics, Elsevier, vol. 70(C), pages 83-96.
    7. 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.
    8. Sun, Chuanwang & Xu, Shuhua & Yang, Mian & Gong, Xu, 2022. "Urban traffic regulation and air pollution: A case study of urban motor vehicle restriction policy," Energy Policy, Elsevier, vol. 163(C).
    9. Christpher Leisinger & Felix Rösel, 2020. "Kaum mehr als ein Strohfeuer – Evaluationsstudien zu Abwrackprämien im Überblick," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 27(03), pages 25-27, June.
    10. Anna Kiziltan & Mustafa Kiziltan & Shihomi Ara Aksoy & Merih Aydınalp Köksal & Ş. Elçin Tekeli & Nilhan Duran & S. Yeşer Aslanoğlu & Fatma Öztürk & Nazan Özyürek & Pervin Doğan & Ağça Gül Yılmaz & Can, 2023. "Cost–benefit analysis of road-transport policy options to combat air pollution in Turkey," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 10765-10798, October.

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    More about this item

    Keywords

    Subsidies; Automobile sector; Difference-in-difference estimator; Green policies;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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