October 12, 2012, 14:00–15:30
Room MS 003
Industrial Organization seminar
Abstract
In the first year after the inception of the Swedish Green Car Rebate (GCR), green cars had carved a 25 percent share of the new vehicle market, an effect of unprecedented scale as compared to recent policies incentivizing the purchase of fuel-efficient vehicles. By awarding vehicles satisfying certain emission criteria a rebate, but giving alternative (renewable) fuels a more lenient treatment than regular (fossil) ones, the GCR led carmakers to introduce a number of high-emission alternative models. This paper examines the impact of regulation on market developments focusing on CO2 emissions of alternative and regular vehicles. Despite a decrease in the short-run, once carmakers adjust their product lines to the policy, CO2 emissions of alternative vehicles increased significantly in relation to those of regular ones, thus undermining the very objectives of the GCR.
Keywords
Automobiles; Emissions; Environmental policy; Flexible-fuel vehicles; Fuel economy; Greenhouse gases; Regulation; Renewable fuels;