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Title: Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany

Author(s): Adamos Adamou, Sofronis Clerides and Theodoros Zachariadis

Publication Date: January 2012

Keyword(s): carbon taxation, CO2 emissions, feebates and German automobile market

Programme Area(s): Industrial Organization

Abstract: Vehicle taxation based on CO2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet little is known about the effectiveness and overall economic impact of these schemes. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to purchasers of low-carbon automobiles. We estimate a discrete choice model of demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. The analysis shows that a well-designed scheme can lead to emission reductions without reducing overall welfare.

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Bibliographic Reference

Adamou, A, Clerides, S and Zachariadis, T. 2012. 'Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8782