IDEAS home Printed from https://ideas.repec.org/a/tpr/restat/v96y2014i2p306-317.html
   My bibliography  Save this article

Market Equilibrium and the Environmental Effects of Tax Adjustments in China's Automobile Industry

Author

Listed:
  • Junji Xiao

    (Fudan University)

  • Heng Ju

    (Shanghai University of Finance and Economics)

Abstract

This paper explores the effects of consumption-tax and fuel-tax adjustments in the Chinese automobile industry. Applying the model and simulation method of Berry, Levinson, and Pakes (1995), we conduct a comparative static analysis of equilibrium prices and sales, fuel consumption, and social welfare before and after tax adjustments. For the first time, we compare the progressivity of both taxes. Our empirical findings suggest that the fuel tax is effective in decreasing fuel consumption at the expense of social welfare, while the consumption tax does not significantly affect either fuel consumption or social welfare. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Junji Xiao & Heng Ju, 2014. "Market Equilibrium and the Environmental Effects of Tax Adjustments in China's Automobile Industry," The Review of Economics and Statistics, MIT Press, vol. 96(2), pages 306-317, May.
    • Handle: RePEc:tpr:restat:v:96:y:2014:i:2:p:306-317
    as

    Download full text from publisher

    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00444
    File Function: link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xu, Jiayi & Tan-Soo, Jie-Sheng & Chu, Yanlai & Zhang, Xiao-Bing, 2023. "Gasoline price and fuel economy of new automobiles: Evidence from Chinese cities," Energy Economics, Elsevier, vol. 126(C).
    2. Bansal, Prateek & Dua, Rubal, 2022. "Fuel consumption elasticities, rebound effect and feebate effectiveness in the Indian and Chinese new car markets," Energy Economics, Elsevier, vol. 113(C).
    3. Prateek Bansal & Rubal Dua, 2022. "Fuel consumption elasticities, rebound effect and feebate effectiveness in the Indian and Chinese new car markets," Papers 2201.08995, arXiv.org.
    4. Chia-Wen Chen & Wei-Min Hu & Christopher R. Knittel, 2017. "Subsidizing Fuel Efficient Cars: Evidence from China's Automobile Industry," NBER Working Papers 23045, National Bureau of Economic Research, Inc.
    5. Ji, Qing & Wang, Chunan & Fan, Ying, 2022. "Environmental and welfare effects of vehicle purchase tax: Evidence from China," Energy Economics, Elsevier, vol. 115(C).
    6. Chen, Yuan & Lin Lawell, C.-Y. Cynthia & Wang, Yunshi, 2020. "The Chinese automobile industry and government policy," Research in Transportation Economics, Elsevier, vol. 84(C).
    7. Arakawa, Kiyoshi, 2022. "Assessing consumer valuations of future costs versus purchase prices in Japan's auto market," Economics of Transportation, Elsevier, vol. 30(C).
    8. Sun, Qi & Xu, Lin & Yin, Hua, 2016. "Energy pricing reform and energy efficiency in China: Evidence from the automobile market," Resource and Energy Economics, Elsevier, vol. 44(C), pages 39-51.
    9. Shanjun Li, 2018. "Better Lucky Than Rich? Welfare Analysis of Automobile Licence Allocations in Beijing and Shanghai," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 2389-2428.
    10. Junji Xiao & Xiaolan Zhou & Wei‐Min Hu, 2017. "Welfare Analysis Of The Vehicle Quota System In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(2), pages 617-650, May.
    11. Chugh, Randy & Cropper, Maureen, 2017. "The welfare effects of fuel conservation policies in a dual-fuel car market: Evidence from India," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 244-261.
    12. Chugh, Randy & Cropper, Maureen, 2014. "The Welfare Effects of Fuel Conservation Policies in the Indian Car Market," RFF Working Paper Series dp-14-33, Resources for the Future.
    13. Caixia Shen & Yanfei Wang & Junji Xiao & Xiaolan Zhou, 2021. "Comparison Between Uniform Tariff and Progressive Consumption Tax in the Chinese Automobile Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 169-213, March.
    14. Tan, Jijun & Xiao, Junji & Zhou, Xiaolan, 2019. "Market equilibrium and welfare effects of a fuel tax in China: The impact of consumers' response through driving patterns," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 20-43.
    15. Zhou, Fan & Yang, Ziying & Wu, Di & Zheng, Zuduo, 2024. "Shifting towards luxury cars: The price and environmental effects of Beijing’s vehicle lottery system and an alternative policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    16. Wu, Jingwen & Zhang, Tong & Liao, Hua, 2024. "Fuel economy standards: Regulatory loopholes and firms’ heterogeneous responses," Journal of Environmental Economics and Management, Elsevier, vol. 123(C).
    17. Pang, Jindong & An, Lan & Shen, Shulin, 2023. "Gasoline prices, traffic congestion, and carbon emissions," Resource and Energy Economics, Elsevier, vol. 75(C).
    18. Wei-Min Hu & Junji Xiao & Xiaolan Zhou, 2014. "Collusion or Competition? Interfirm Relationships in the Chinese Auto Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 1-40, March.
    19. Ziying Yang & Manping Tang, 2019. "Welfare Analysis of Government Subsidy Programs for Fuel-Efficient Vehicles and New Energy Vehicles in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 911-937, October.
    20. Yasser A. Al-Rawi & Mohammed Harith Imlus & Yusri Yusup & Sofri Bin Yahya, 2021. "Factors affecting vehicle exhaust emissions, driver motivations as a mediator," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 361-407, April.

    More about this item

    Keywords

    Chinese automobile industry; welfare analysis; environmental effect; BLP model; tax progressivity;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:96:y:2014:i:2:p:306-317. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The MIT Press (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.