Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market

• Mathias Reynaert ^[1]
  1. [1] Université de Toulouse

     Université de Toulouse

     Arrondissement de Toulouse, Francia

     
• Localización: Review of economic studies, ISSN 0034-6527, Vol. 88, Nº 1, 2021, págs. 454-488
• Idioma: inglés
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• Resumen

  • This article studies the introduction of an EU-wide emission standard on the automobile market. Using panel data from 1998 to 2011, I find that firms decreased emission ratings by 14%. Firms use technology adoption and gaming of emission tests to decrease emissions, rather than shifting the sales mix or downsizing. I find that the standard missed its emission target, and from estimating a structural model, I find that the standard was not welfare improving. The political environment in the EU shaped the design and weak enforcement and resulted in firms’ choices for abatement by technology adoption and gaming.