Transportation

, Volume 45, Issue 3, pp 989–1001 | Cite as

Drivers’ response to fuel taxes and efficiency standards: evidence from Germany

Article

Abstract

Using household travel diary data collected in Germany between 1997 and 2015, we employ an instrumental variable (IV) approach that enables us to consistently estimate both fuel price and efficiency elasticities. The aim is to gauge the relative impacts of fuel economy standards and fuel taxes on distance traveled. Our elasticity estimates indicate that higher fuel prices reduce driving to a substantial extent, though not to the same degree as higher fuel efficiency increases driving. This finding indicates an offsetting effect of fuel efficiency standards on the effectiveness of fuel taxation, calling into question the efficacy of the European Commission’s legislation to limit carbon dioxide emissions for new cars.

Keywords

Automobile travel Instrumental variable approach Rebound effect 

JEL Classification

D12 Q41 

Notes

Acknowledgements

We are grateful for invaluable comments and suggestions by Christoph M. Schmidt, as well as three anonymous reviewers. This work has been partly supported by the NRW Ministry of Innovation, Science, and Research within the project “Rebound Effects in NRW” and by the Collaborative Research Center “Statistical Modeling of Nonlinear Dynamic Processes” (SFB 823) of the German Research Foundation (DFG), within Project A3, “Dynamic Technology Modeling”.

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.RWI Leibniz Institute for Economic ResearchEssenGermany
  2. 2.Ruhr University BochumBochumGermany
  3. 3.Jacobs University BremenBremenGermany

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