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Assessment of CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece

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  • Adamos Adamou
  • Sofronis Clerides
  • Theodoros Zachariadis

Abstract

Vehicle taxation based on a car’s CO2 emission levels is increasingly adopted in countries around the world. This paper describes a model of oligopolistic competition in markets with differentiated products, simulating automobile demand and supply under alternative tax regimes. The objective is to perform simulations in order to evaluate policies that could shift consumer purchases towards low-CO2 cars and thus lead to the reduction of fuel use and CO2 emissions. Focusing on an analysis of the car market of Greece, we assess the environmental and economic implications of alternative carbon-based tax schemes. Our findings, which are relevant for other European countries as well, illustrate that careful policy design, supported by an appropriate model, can bring about substantial environmental benefits without losing control of economic parameters such as public finances or firm profits. In some cases vehicle taxation can have adverse (though unintended) environmental consequences.

Suggested Citation

  • Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Assessment of CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," University of Cyprus Working Papers in Economics 04-2012, University of Cyprus Department of Economics.
    • Handle: RePEc:ucy:cypeua:04-2012
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    File URL: https://papers.econ.ucy.ac.cy/RePEc/papers/04-12.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Adamos Adamou & Sofronis Clerides, 2013. "Tax Reform in the Cypriot Road Transport Sector," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 7(1), pages 87-114, June.
    3. Mayeres, Inge & Vanhulsel, Marlies, 2017. "CarTax: A simulation model for analysing the reform of car taxation in Flanders," Research in Transportation Economics, Elsevier, vol. 62(C), pages 11-24.
    4. Davide Cerruti & Anna Alberini & Joshua Linn, 2019. "Charging Drivers by the Pound: How Does the UK Vehicle Tax System Affect CO2 Emissions?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 99-129, September.
    5. Biresselioglu, Mehmet Efe & Demirbag Kaplan, Melike & Yilmaz, Barbara Katharina, 2018. "Electric mobility in Europe: A comprehensive review of motivators and barriers in decision making processes," Transportation Research Part A: Policy and Practice, Elsevier, vol. 109(C), pages 1-13.
    6. Malina, Christiane, 2016. "The environmental impact of vehicle circulation tax reform in Germany," CAWM Discussion Papers 86, University of Münster, Münster Center for Economic Policy (MEP).

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    Keywords

    CO2 emissions; automobile market; feebates; carbon taxation.;
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