Governments around the world are increasingly intervening in automobile markets to improve fuel economy and reduce emissions of CO2 from new vehicles. This report reviews the rationale for such intervention and examines measures for maximum effectiveness and minimum cost. The Round Table brought together economists, policy makers and auto engineers with the aim of advancing understanding of why car markets currently fail to deliver sufficient fuel economy. It started by questioning whether any additional measures would be necessary once an appropriate price for carbon dioxide is established via fuel taxes. It confirmed that there are indeed market imperfections that merit additional government intervention. Fuel economy and CO2 regulations are an essential part of the package. The key to maximising the benefits of such regulations is long-term planning. The longer the timeframe, the less industry investment is handicapped by uncertainty. Subsidies to electric vehicles are more problematic because of the risks of prematurely picking winning technologies and creating subsidy dependence. And electricity production has yet to be decarbonised. However, intervention to steer innovation in this direction is merited so long as the risks of not attaining climate policy targets are seen as higher than the risks of intervention.Table of Content :Summary of DiscussionsCombinations of Instruments to Achieve Low-Carbon Vehicle-Miles, by Don Fullerton and Daniel H. Karney (USA)-1. Introduction-2. Too Much Pollution, Too Many Cars, Too Many Miles-3. Current Policies in the United States and Europe-4. Benefits, Costs and Externalities-5. The Ideal Tax on Emissions-6. Holistic Approach-7. Potential Alternative Instrument Combinations-8. Additional Complexity -9. Conclusions Why the Market for New Passenger Cars Generally Undervalues Fuel Economy, by David Greene (USA)-1. Introduction-2. Fuel Economy and the Rational Economic Consumer-3. Empirical Evidence of Consumers Willingness-To-Pay for Fuel Economy-4. Uncertainty and Loss Aversion: Context-Dependent Preferences -5. Concluding ObservationsThe Impact of Economic Instruments on the Auto Industry and the Consequences of Fragmenting Markets Focus on the EU Case, by Luc Bastard (France)-1. Abstract-2. Overview of Fiscal Measures in the European Union for Reducing Co2 Emissions from Conventional Cars -3. How Can OEMs Manage the Taxation?-4. Economic Incentives for Future Electric Vehicles and Very Low CO2 Vehicles?-5. Conclusions
Author(s): OECD; International Transport Forum
Series: ITF Round Tables 148
Publisher: OECD Publishing; International Transport Forum
Year: 2010
Language: English
Pages: 166
TABLE OF CONTENTS......Page 7
SUMMARY OF DISCUSSIONS......Page 9
COMBINATIONS OF INSTRUMENTS TO ACHIEVE LOW-CARBON VEHICLE-MILES......Page 27
1. INTRODUCTION......Page 31
2. TOO MUCH POLLUTION, TOO MANY CARS, TOO MANY MILES......Page 33
3. CURRENT POLICIES IN THE UNITED STATES AND EUROPE......Page 38
4. BENEFITS, COSTS AND EXTERNALITIES......Page 40
5. THE “IDEAL” TAX ON EMISSIONS......Page 41
6. HOLISTIC APPROACH......Page 43
7. POTENTIAL ALTERNATIVE INSTRUMENT COMBINATIONS......Page 47
8. ADDITIONAL COMPLEXITY......Page 48
9. CONCLUSION......Page 50
NOTES......Page 51
BIBLIOGRAPHY......Page 52
WHY THE MARKET FOR NEW PASSENGER CARS GENERALLY UNDERVALUES FUEL ECONOMY......Page 53
1. INTRODUCTION......Page 57
2. FUEL ECONOMY AND THE RATIONAL ECONOMIC CONSUMER......Page 58
3. EMPIRICAL EVIDENCE OF CONSUMERS’ WILLINGNESS-TO-PAY FOR FUEL ECONOMY......Page 63
4. UNCERTAINTY AND LOSS AVERSION: CONTEXT-DEPENDENT PREFERENCES......Page 70
5. CONCLUDING OBSERVATIONS......Page 76
NOTE......Page 77
BIBLIOGRAPHY......Page 78
THE IMPACT OF ECONOMIC INSTRUMENTS ON THE AUTO INDUSTRY AND THE CONSEQUENCES OF FRAGMENTING MARKETS– FOCUS ON THE EU CASE......Page 83
1. ABSTRACT......Page 87
2. OVERVIEW OF FISCAL MEASURES IN THE EUROPEAN UNION FOR REDUCING CO2 EMISSIONS FROM CONVENTIONAL CARS......Page 88
3. HOW CAN OEMs MANAGE THE TAXATION?......Page 114
4. ECONOMIC INCENTIVES FOR FUTURE EVs AND VERY LOW CO2 VEHICLES?......Page 118
5. CONCLUSIONS......Page 122
THE DEMAND FOR AND THE SUPPLY OF FUEL EFFICIENCY IN MODELS OF INDUSTRIAL ORGANISATION......Page 125
1. INTRODUCTION......Page 129
2. THEORY-FREE ESTIMATES OF THE IMPACT OF FUEL PRICES ON FUEL EFFICIENCY STANDARDS......Page 130
3. DEMAND-SIDE EFFECTS......Page 133
4. SUPPLY-SIDE EFFECTS......Page 142
5. CONCLUSIONS......Page 149
NOTES......Page 151
BIBLIOGRAPHY......Page 152
LIST OF PARTICIPANTS......Page 157
