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Welfare Effects of Distortionary Tax Incentives under Preference Heterogeneity: An Application to Employer-provided Electric Cars

Author

Listed:
  • Alexandros Dimitropoulos
  • Jos N. van Ommeren
  • Paul Koster
  • Piet Rietveld†

    (VU University Amsterdam)

Abstract

This paper presents an approach for the estimation of welfare effects of tax policy changes under heterogeneity in consumer preferences. The approach is applied to evaluate the welfare effects of current tax advantages for electric vehicles supplied as fringe benefits by employers. Drawing on stated preferences of Dutch company car drivers, we assess the short-run welfare effects of changes in the taxation of the private use of these vehicles. We find that the welfare gain of a marginal increase in the taxation of electric company cars is substantial and even outweighs the marginal tax revenue raised.

Suggested Citation

  • Alexandros Dimitropoulos & Jos N. van Ommeren & Paul Koster & Piet Rietveld†, 2014. "Welfare Effects of Distortionary Tax Incentives under Preference Heterogeneity: An Application to Employer-provided Electric Cars," Tinbergen Institute Discussion Papers 14-064/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20140064
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    References listed on IDEAS

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    Cited by:

    1. Taha Hossein Rashidi & Matthew J. Roorda, 2018. "A business establishment fleet ownership and composition model," Transportation, Springer, vol. 45(3), pages 971-987, May.
    2. Alexandros Dimitropoulos, 2014. "The Influence of Environmental Concerns on Drivers’ Preferences for Electric Cars," Tinbergen Institute Discussion Papers 14-128/VIII, Tinbergen Institute.
    3. Dimitropoulos, Alexandros & van Ommeren, Jos N. & Koster, Paul & Rietveld, Piet, 2016. "Not fully charged: Welfare effects of tax incentives for employer-provided electric cars," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 1-19.
    4. Panle Jia Barwick & Shengmao Cao & Shanjun Li, 2021. "Local Protectionism, Market Structure, and Social Welfare: China's Automobile Market," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 112-151, November.

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    More about this item

    Keywords

    Social welfare; Latent class; Stated preference; Company car; Electric vehicle; Plug-in hybrid;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • 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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