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A green reform is not always green

Author

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  • Fosgerau, Mogens
  • Jensen, Thomas C.

Abstract

This paper analyses a tax reform, explicitly conceived by policy makers to be climate-friendly, that partly replaces a high vehicle registration tax by road user charging and allows for differentiation of the remaining registration tax by fuel efficiency. A microeconomic framework is proposed to analyse such a reform. For the case of Denmark, the analysis shows that the reform is likely to yield a significant and robust welfare gain. However, it seems not unlikely that CO2 emissions from passenger cars may increase as a result of the reform.

Suggested Citation

  • Fosgerau, Mogens & Jensen, Thomas C., 2013. "A green reform is not always green," MPRA Paper 42264, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42264
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    File URL: https://mpra.ub.uni-muenchen.de/42264/1/MPRA_paper_42264.pdf
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    References listed on IDEAS

    as
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    7. Parks, Richard W, 1977. "Determinants of Scrapping Rates for Postwar Vintage Automobiles," Econometrica, Econometric Society, vol. 45(5), pages 1099-1115, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Huang, Jian & Leng, Mingming & Liang, Liping & Luo, Chunlin, 2014. "Qualifying for a government’s scrappage program to stimulate consumers’ trade-in transactions? Analysis of an automobile supply chain involving a manufacturer and a retailer," European Journal of Operational Research, Elsevier, vol. 239(2), pages 363-376.
    2. De Borger, Bruno & Mulalic, Ismir & Rouwendal, Jan, 2016. "Substitution between cars within the household," Transportation Research Part A: Policy and Practice, Elsevier, vol. 85(C), pages 135-156.

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    More about this item

    Keywords

    Congestion; Road user charging; Tax reform; CO2; Welfare economics; Registration tax;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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