Abstract
Easy access to stations serving alternative fuels is an obvious concern for customers considering to buy a "green" car. Yet, the supply of fuel is seldom considered analyzing how to promote the adoption of environmentally friendly vehicles. I develop and estimate a joint model of demand for cars and supply of alternative fuels. I use this framework to compare the effectiveness of a subsidy to consumers who buy cars running on alternative fuels to that of a subsidy to gas stations installing alternative fuel pumps. Counterfactual simulations suggest that subsidizing fuel retailers to offer alternative fuels is a more effective policy that indirectly increases low emission car sales.
Keywords
Alternative fuel cars; Entry; Environmental policy;
JEL codes
- H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies
- H25: Business Taxes and Subsidies
- L11: Production, Pricing, and Market Structure • Size Distribution of Firms
- L91: Transportation: General
- Q48: Government Policy
Reference
Giulia Pavan, “Green Car Adoption and the Supply of Alternative Fuels”, TSE Working Paper, n. 17-875, December 2017.
See also
Published in
TSE Working Paper, n. 17-875, December 2017