Working Paper: NBER ID: w11553
Authors: Ye Feng; Don Fullerton; Li Gan
Abstract: Mobile sources contribute large percentages of each pollutant, but technology is not yet available to measure and tax emissions from each vehicle. We build a behavioral model of household choices about vehicles and miles traveled. The ideal-but-unavailable emissions tax would encourage drivers to abate emissions through many behaviors, some of which involve market transactions that can be observed for feasible market incentives (such as a gas tax, subsidy to new cars, or tax by vehicle type). Our model can calculate behavioral effects of each such price and thus calculate car choices, miles, and emissions. \n\tA nested logit structure is used to model discrete choices among different vehicle bundles. We also consider continuous choices of miles driven and the age of each vehicle. We propose a consistent estimation method for both discrete and continuous demands in one step, to capture the interactive effects of simultaneous decisions. Results are compared with those of the traditional sequential estimation procedure.
Keywords: No keywords provided
JEL Codes: D12; H23; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax on emissions (Q58) | buy newer, cleaner cars (Q55) |
| tax on emissions (Q58) | opt for smaller and more fuel-efficient vehicles (R42) |
| tax on emissions (Q58) | repair pollution control equipment (Q52) |
| tax on emissions (Q58) | purchase cleaner gasoline (L71) |
| tax on emissions (Q58) | drive less (R48) |
| tax on emissions (Q58) | drive less aggressively (R48) |
| tax on emissions (Q58) | avoid cold starts (Y60) |
| higher gasoline price (R48) | shift from car-SUV pair to two-car bundle (D16) |
| higher gasoline price (R48) | reduce emissions (Q52) |
| tax on vehicle age (H25) | switch to newer vehicles (L62) |
| switch to newer vehicles (L62) | reduce emissions (Q52) |