Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/199066
Authors: 
Marz, Waldemar
Goetzke, Frank
Year of Publication: 
2019
Series/Report no.: 
ifo Working Paper No. 292
Abstract: 
Climate policy instruments in the transportation sector like fuel economy standards (CAFE) and fuel taxes not only affect households’ vehicle choice, but also the urban form in the long run. We introduce household level vehicle choice into the urban economic monocentric city model and run long-term climate policy scenarios to analyze the welfare effects of this urban adjustment in reaching emission goals. This goes beyond more short-term empirical analyses of the rebound effect in driving. We find that stricter CAFE standards lead to an urban expansion and considerable additional welfare costs for certain emission goals, unaccounted for in the previous literature on welfare costs of CAFE. These welfare costs can be reduced roughly by one half through the combination of CAFE with an urban growth boundary. Fuel taxes, in turn, lead to an urban contraction and additional welfare gains. We analyze the sensitivity of the results to changes in model parameters.
Subjects: 
Fuel economy standards
fuel tax
monocentric city
rebound effect
JEL: 
H23
L90
Q48
R40
Document Type: 
Working Paper

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