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American Economic Review Vol. 106 No. 12 2016

Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors

Stephen P. Holland1; Erin T. Mansur2; Nicholas Z. Muller3; Andrew J. Yates4

1 Department of Economics, University of North Carolina at Greensboro, Bryan School of Business and Economics, Bryan 462, PO Box 26170, Greensboro, NC 27402, and NBER (e-mail: ) · 2 Tuck School of Business at Dartmouth, 100 Tuck Hall, Dartmouth College, Hanover, NH 03755, and NBER (e-mail: ) · 3 Department of Economics, Middlebury College, Warner Hall 305E, Middlebury, VT 05753, and NBER (e-mail: ) · 4 Department of Economics and Curriculum for the Environment and Ecology, University of North Carolina at Chapel Hill, CB 3305, Chapel Hill, NC 27599 (e-mail: )

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Abstract

We combine a theoretical discrete-choice model of vehicle purchases, an econometric analysis of electricity emissions, and the AP2 air pollution model to estimate the geographic variation in the environmental benefits from driving electric vehicles. The second-best electric vehicle purchase subsidy ranges from $2,785 in California to −$4,964 in North Dakota, with a mean of −$1,095. Ninety percent of local environmental externalities from driving electric vehicles in one state are exported to others, implying they may be subsidized locally, even when the environmental benefits are negative overall. Geographically differentiated subsidies can reduce deadweight loss, but only modestly.

DOI
10.1257/aer.20150897
Volume
106
Issue
12
Pages
3700-3729
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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