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A Note on Potential Perverse Effects of Vehicle Carbon Taxation

Author

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  • Douglas A. L. Auld

    (University of Guelph)

Abstract

Employing a unique approach to household utility maximization, this paper explores the implications of vehicle carbon taxation and subsidies in the context of household choice for urban transportation mode where there exist two private characteristics of travel: comfort and time efficiency, and a third public negative characteristic, carbon emissions. Two policies to reduce carbon emissions are examined in this framework; (1) subsidizing public transportation and imposing a tax on vehicle emissions, (2) increasing the cost of private vehicle travel, and providing a rebate of the tax collected to the consumer. The results suggest that the latter policy may have little impact on carbon emissions and could possibly lead to an increase in emissions.

Suggested Citation

  • Douglas A. L. Auld, 2024. "A Note on Potential Perverse Effects of Vehicle Carbon Taxation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 52(2), pages 93-102, September.
    • Handle: RePEc:kap:atlecj:v:52:y:2024:i:2:d:10.1007_s11293-024-09805-z
    DOI: 10.1007/s11293-024-09805-z
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    References listed on IDEAS

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    5. Julius J. Andersson, 2019. "Carbon Taxes and CO2 Emissions: Sweden as a Case Study," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 1-30, November.
    6. Richard G. Lipsey & Gideon Rosenbluth, 1971. "A Contribution to the New Theory of Demand: A Rehabilitation of the Giffen Good," Canadian Journal of Economics, Canadian Economics Association, vol. 4(2), pages 131-163, May.
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