Fuel for inequality : distributional effects of environmental reforms on private transport

Tovar Reaños, Miguel Angel ; Sommerfeld, Katrin

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URL: https://ub-madoc.bib.uni-mannheim.de/41820
URN: urn:nbn:de:bsz:180-madoc-418208
Document Type: Working paper
Year of publication: 2016
The title of a journal, publication series: ZEW Discussion Papers
Volume: 16-090
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: Q41 , R48 , C33,
Keywords (English): Transport policies , distributional effects , electrical vehicles , passenger cars
Abstract: This paper provides the first empirical evidence of the distributional effects of subsidies for the purchase of alternative vehicles based on an extended version of Hausman's exact consumer surplus. Consistently with economic theory, we estimate changes in household welfare, inequality and social welfare corresponding to different reforms. First, we find that an additional tax on conventional fuel is regressive. However, returning the additional tax revenue via lump-sum transfers can alleviate this effect. Second, when the additional revenue is also used to finance subsidies for electrical and compressed natural gas (CNG) vehicles, households that own such vehicles experience welfare gains. However, this policy also increases income inequality and decreases social welfare.

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