Montag, Josef (2015): The Simple Economics of Motor Vehicle Pollution: A Case for Fuel Tax. Forthcoming in: Energy Policy
Preview |
PDF
MPRA_paper_64605.pdf Download (239kB) | Preview |
Abstract
The volume of pollution produced by an automobile is determined by driver's behavior along three margins: (i) vehicle selection, (ii) kilometers driven, and (iii) on-road fuel economy. The first two margins have been studied extensively, however the third has received scant attention. How significant is this 'intensive margin'? What would be the optimal policies when it is taken into account? The paper develops and analyzes a simple model of the technical and behavioral mechanisms that determine the volume emissions produced by a car. The results show that an optimal fuel tax would provide drivers with appropriate incentives along all three margins and that only public information is needed for a fuel tax to be set optimally. In contrast, an optimal distance tax would require private information. Lastly, relative to the optimal fuel tax, a simple uniform fuel tax is shown to be progressive. Thus, being already deployed worldwide, a uniform fuel tax is an attractive second-best policy. These findings should be accounted for when designing new mechanisms to alleviate motor vehicle pollution.
Item Type: | MPRA Paper |
---|---|
Original Title: | The Simple Economics of Motor Vehicle Pollution: A Case for Fuel Tax |
Language: | English |
Keywords: | automobile externalities, car pollution, CO2 emissions, fuel economy, driving behavior, distance tax, fuel tax. |
Subjects: | H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities ; Redistributive Effects ; Environmental Taxes and Subsidies Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R41 - Transportation: Demand, Supply, and Congestion ; Travel Time ; Safety and Accidents ; Transportation Noise R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R48 - Government Pricing and Policy |
Item ID: | 64605 |
Depositing User: | Josef Montag |
Date Deposited: | 27 May 2015 06:10 |
Last Modified: | 04 Oct 2019 16:46 |
References: | Aarts, L., van Schagen, I., 2006. Driving speed and the risk of road crashes: a review. Accid. Analysis & Prev. 38, 215–224. Arceo-Gomez, E.O., Hanna, R., Oliva, P., 2012. Does the effect of pollution on infant mortality differ between developing and developed countries? Evidence from mexico city. Working Paper no. 18349. National Bureau of Economic Research. Cambridge, MA. Austin, D., Dinan, T., 2005. Clearing the air: The costs and consequences of higher CAFE standards and increased gasoline taxes. J. Environ. Econ. Manag. 50, 562–582. Barkenbus, J.N., 2010. Eco-driving: An overlooked climate change initiative. Energy Policy 38, 762–769. Barth, M., Boriboonsomsin, K., 2009. Energy and emissions impacts of a freeway-based dynamic eco-driving system. Transp. Res. Part D: Transp. Environ. 14, 400–410. Becker, G.S., 1962. Irrational behavior and economic theory. J. Polit. Econ. 70, 1–13. van Benthem, A., 2015. What is the optimal speed limit on freeways? J. Public Econ. 124, 44–62. Beusen, B., Broekx, S., Denys, T., Beckx, C., Degraeuwe, B., Gijsbers, M., Scheepers, K., Govaerts, L., Torfs, R., Panis, L.I., 2009. Using on-board logging devices to study the longer-term impact of an eco-driving course. Transp. Res. Part D: Transp. Environ. 14, 514–520. Bin, S., Dowlatabadi, H., 2005. Consumer lifestyle approach to US energy use and the related CO2 emissions. Energy Policy 33, 197–208. Bolderdijk, J.W., Knockaert, J., Steg, E.M., Verhoef, E.T., 2011. Effects of Pay-As- You-Drive vehicle insurance on young drivers’ speed choice: results of a Dutch field experiment. Accid. Analysis & Prev. 43, 1181–1186. Carrico, A.R., Padgett, P., Vandenbergh, M.P., Gilligan, J., Wallston, K.A., 2009. Costly myths: An analysis of idling beliefs and behavior in personal motor vehicles. Energy Policy 37, 2881–2888. Chan, T.L., Ning, Z., 2005. On-road remote sensing of diesel vehicle emissions measurement and emission factors estimation in Hong Kong. Atmospheric Environ. 39, 6843–6856. Chen, Y., Ebenstein, A., Greenstone, M., Li, H., 2013. Evidence on the impact of sustained exposure to air pollution on life expectancy from China’s Huai River policy. Proc. Natl. Acad. Sci. 110, 12936–12941. Crandall, R.W., 1992. Policy watch: corporate average fuel economy standards. J. Econ. Perspectives 6, 171–180. Dietz, T., Gardner, G.T., Gilligan, J., Stern, P.C., Vandenbergh, M.P., 2009. Household actions can provide a behavioral wedge to rapidly reduce US carbon emissions. Proc. Natl. Acad. Sci. 106, 18452–18456. European Automobile Manufacturers Association, 2013. Overview of CO2-based motor vehicle taxes in the EU. Online at http://www.acea.be/publications/ article/overview-of- co2-based-motor-vehicle-taxes-in-the-eu (last accessed on May 1, 2015). Brussels, 4 April 2013. European Comission, 2003. Council Directive 2003/96/EC of 27 October 2003: restruc- turing the Community framework for the taxation of energy products and electricity. Official Journal of the European Union. Brussels, 31 October 2003. European Comission, 2013. Excise duty tables. Online at http://ec.europa.eu/tax- ation_customs/index_en.htm (last accessed on February 25, 2014). Brussels, 1 July 2013. Fischer, C., Harrington, W., Parry, I.W.H., 2007. Should automobile fuel economy standards be tightened? Energy J. 28, 1–29. Frey, H.C., Kim, K., Pang, S.H., Rasdorf, W.J., Lewis, P., 2008a. Characterization of real-world activity, fuel use, and emissions for selected motor graders fueled with petroleum diesel and B20 biodiesel. J. Air & Waste Manag. Assoc. 58, 1274–1287. Frey, H.C., Zhang, K., Rouphail, N.M., 2008b. Fuel use and emissions comparisons for alternative routes, time of day, road grade, and vehicles based on in-use measurements. Environ. Sci. & Technol. 42, 2483–2489. Frondel, M., Ritter, N., Vance, C., 2012. Heterogeneity in the rebound effect: further evidence for Germany. Energy Econ. 34, 461–467. Frondel, M., Schmidt, C.M., Vance, C., 2011. A regression on climate policy: The European Commission’s legislation to reduce CO2 emissions from automobiles. Transp. Res. Part A: Policy Pract. 45, 1043–1051. Frondel, M., Vance, C., 2009. Do high oil prices matter? Evidence on the mobility behavior of German households. Environ. Resour. Econ. 43, 81–94. Frondel, M., Vance, C., 2010. Driving for fun? Comparing the effect of fuel prices on weekday and weekend fuel consumption. Energy Econ. 32, 102–109. Frondel, M., Vance, C., 2013. Fuel taxes versus efficiency standards – an instrumental variable approach. Ruhr Economic Papers no. 445. Rheinisch-Westfälisches Institut für Wirtschaftsforschung. Essen, Germany. Fullerton, D., West, S.E., 2002. Can taxes on cars and on gasoline mimic an unavailable tax on emissions. J. Environ. Econ. Manag. 43, 135–157. Gardner, G.T., Stern, P.C., 2008. The short list: the most effective actions U.S. households can take to curb climate change. Environ. 50, 12–25. Gauderman, W.J., Avol, E., Lurmann, F., Kuenzli, N., Gilliland, F., Peters, J., McConnell, R., 2005. Childhood asthma and exposure to traffic and nitrogen dioxide. Epidemiol. 16, 737–743. Gerard, D., Lave, L., 2003. The economics of CAFE reconsidered: a response to CAFE critics and a case for fuel economy standards. Working paper. AEI-Brookings Joint Center for Regulatory Studies, Regulatory Analysis 03-10. Giblin, S., McNabola, A., 2009. Modelling the impacts of a carbon emission-differentiated vehicle tax system on CO2 emissions intensity from new vehicle purchases in Ireland. Energy Policy 37, 1404–1411. Gonder, J., Earleywine, M., Sparks, W., 2012. Analyzing vehicle fuel saving opportunities through intelligent driver feedback. SAE Technical Paper 2012-01-0494. SAE International. Warrendale, PA. Goodwin, P., Dargay, J., Hanly, M., 2004. Elasticities of road traffic and fuel consumption with respect to price and income: a review. Transp. Rev. 24, 275–292. Grabowski, D.C., Morrisey, M.A., 2006. Do higher gasoline taxes save lives? Econ. Lett. 90, 51–55. Greene, D.L., 2011. What is greener than a VMT tax? The case for an indexed energy user fee to finance us surface transportation. Transp. Res. Part D: Transp. Environ. 16, 451–458. Greene, D.L., 2012. Rebound 2007: Analysis of U.S. light-duty vehicle travel statistics. Energy Policy 41, 14–28. Greene, D.L., Evans, D.H., Hiestand, J., 2013. Survey evidence on the willingness of U.S. consumers to pay for automotive fuel economy. Energy Policy 61, 1539–1550. Harrington, W., 1997. Fuel economy and motor vehicle emissions. J. Environ. Econ. Manag. 33, 240–252. Huo, H., Yao, Z., Zhang, Y., Shen, X., Zhang, Q., Ding, Y., He, K., 2012. On-board measurements of emissions from light-duty gasoline vehicles in three mega-cities of China. Atmospheric Environ. 49, 371–377. Innes, R., 1996. Regulating automobile pollution under certainty, competition, and imperfect information. J. Environ. Econ. Manag. 31, 219–239. International Energy Agency, 2014. CO2 emissions from fuel combustion. Technical Report. Organisation for Economic Co-operation and Development. Paris. Karplus, V.J., Paltsev, S., Babiker, M., Reilly, J.M., 2013. Should a vehicle fuel economy standard be combined with an economy-wide greenhouse gas emissions constraint? Implications for energy and climate policy in the United States. Energy Econ. 36, 322–333. Khazzoom, J.D., 1995. An econometric model of the regulated emissions for fuel-efficient new vehicles. J. Environ. Econ. Manag. 28, 190–204. Kleit, A.N., 2004. Impacts of long-range increases in the fuel economy (CAFE) standard. Econ. Inq. 42, 279–294. Ko, J., Guensler, R., Hunter, M., 2010. Analysis of effects of driver/vehicle characteristics on acceleration noise using GPS-equipped vehicles. Transp. Res. Part F: Traffic Psychol. Behav. 13, 21–31. Kobayashi, S., Plotkin, S., Ribeiro, S.K., 2009. Energy efficiency technologies for road vehicles. Energy Effic. 2, 125–137. Kunert, U., Kuhfeld, H., 2007. The diverse structures of passenger car taxation in Europe and the EU Commissions proposal for reform. Transp. Policy 14, 306–316. Litman, T.A., 2013. Air pollution, in: Transportation Cost and Benefit Analysis: Techniques, Estimates and Implications. Second ed. Victoria Transport Policy Institute, Victoria, Canada, pp. 1–33. Montag, J., 2014. A radical change in traffic law: effects on fatalities in the Czech Republic. J. Public Heal. 36, 539–545. Ning, Z., Cheung, C.S., Lu, Y., Liu, M.A., Hung, W.T., 2005. Experimental and numerical study of the dispersion of motor vehicle pollutants under idle condition. Atmospheric Environ. 39, 7880–7893. Nordhaus, W., 2014. Estimates of the social cost of carbon: concepts and results from the DICE-2013R model and alternative approaches. J. Assoc. Environ. Resour. Econ. 1, 273–312. Nordhaus, W.D., 2011. Estimates of the social cost of carbon: background and results from the RICE-2011 model. Working Paper no. 17540. National Bureau of Economic Research. Cambridge, MA. Onoda, T., 2009. IEA policies—G8 recommendations and an afterwards. Energy Policy 37, 3823–3831. Palma, A.D., Lindsey, R., Quinet, E., Vickerman, R., 2013. A Handbook of Transport Economics. Edward Elgar Publishing, Cheltenham, UK. Parry, I.W.H., Small, K.A., 2005. Does Britain or the United States have the right gasoline tax? Am. Econ. Rev. 95, 1276–1289. Parry, I.W.H., Walls, M., Harrington, W., 2007. Automobile externalities and policies. J. Econ. Lit. 45, 373–399. Pindyck, R.S., 2013. Climate change policy: what do the models tell us? J. Econ. Lit. 51, 860–872. Proost, S., Delhaye, E., Nijs, W., Regemorter, D.V., 2009. Will a radical transport pricing reform jeopardize the ambitious EU climate change objectives? Energy Policy 37, 3863–3871. Sato, S., Suzuki, H., Miya, M., Iida, N., 2010. Analysis of the effect of eco-driving with early shift-up on real-world emission. SAE Technical Paper 2010-01-2279. SAE International. Warrendale, PA. Stern, N., 2013. The structure of economic modeling of the potential impacts of climate change: grafting gross underestimation of risk onto already narrow science models. J. Econ. Lit. 51, 838–859. Sterner, T., 2007. Fuel taxes: an important instrument for climate policy. Energy Policy 35, 3194–3202. Takada, Y., Ueki, S., Saito, A., Sawazu, N., Nagatomi, Y., 2007. Improvement of fuel economy by eco-driving with devices for freight vehicles in real traffic conditions. SAE Technical Paper 2007-01-1323. SAE International. Warrendale, PA. Thijssen, R., Hofman, T., Ham, J., 2014. Ecodriving acceptance: an experimental study on anticipation behavior of truck drivers. Transp. Res. Part F: Traffic Psychol. Behav. 22, 249–260. Tol, R.S.J., 2005. The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties. Energy Policy 33, 2064–2074. Tong, H.Y., Hung, W.T., Cheung, C.S., 2000. On-road motor vehicle emissions and fuel consumption in urban driving conditions. J. Air & Waste Manag. Assoc. 50, 543–554. Unal, A., Frey, H.C., Rouphail, N.M., 2004. Quantification of highway vehicle emissions hot spots based upon on-board measurements. J. Air & Waste Manag. Assoc. 54, 130–140. U.S. Environmental Protection Agency, 2005. Emission Facts: Average Carbon Dioxide Emissions Resulting from Gasoline and Diesel Fuel. Technical Report. Washington, D.C. Van Mierlo, J., Maggetto, G., Van de Burgwal, E., Gense, R., 2004. Driving style and traffic measures-influence on vehicle emissions and fuel consumption. Proc. Inst. Mech. Eng. Part D: J. Automob. Eng. 218, 43–50. Vandenbergh, M.P., Barkenbus, J., Gilligan, J., 2008. Individual carbon emissions: the low-hanging fruit. UCLA Law Rev. 55, 1701–1758. Vandenbergh, M.P., Steinemann, A.C., 2007. The carbon-neutral individual. New York Univ. Law Rev. 82, 1673. Wang, H., Fu, L., Zhou, Y., Li, H., 2008. Modelling of the fuel consumption for passenger cars regarding driving characteristics. Transp. Res. Part D: Transp. Environ. 13, 479–482. World Health Organization, 2014. Diesel and Gasoline Engine Exhausts and some Nitroarenes. World Health Organization, Lyon, France. Wåhlberg, A.E., 2007. Long-term effects of training in economical driving: fuel consumption, accidents, driver acceleration behavior and technical feedback. Int. J. Ind. Ergonomics 37, 333–343. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/64605 |
Available Versions of this Item
-
The Simple Economics of Motor Vehicle Pollution: A Case for Fuel Tax. (deposited 23 May 2015 12:04)
- The Simple Economics of Motor Vehicle Pollution: A Case for Fuel Tax. (deposited 27 May 2015 06:10) [Currently Displayed]