Conference Agenda
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Daily Overview |
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Environmental Policy 3 Location: B128 Session Chair: Don Fullerton, University of Illinois Urbana-Champaign | |
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Policy anticipation and consumer response to incentives for electric and low-emissions cars: Evidence from the Italian car market 1: University of Turin, Italy; 2: University of Maryland, USA; 3: Collegio Carlo Alberto, Italy A number of countries (including France, Norway, Italy, and others) have adopted policies to incentivize the purchase of low-emissions or electric vehicles (EVs) and penalize those of high emitters. Recent studies have examined the effectiveness and/or cost-effectiveness of these schemes in terms of CO2 emissions avoided or induced vehicle purchases, and have typically assumed away policy anticipation or other effects that would render these policies much less cost-effective. We examine the Italian bonus-malus policy, which was implemented between 2019 and 2022 to reduce CO2 emissions from new passenger cars. We ask three main research questions. First, did consumers respond to these incentives at all? Second, is there evidence that car buyers postponed their purchases of low emitters to benefit from the bonus? Third, did consumers interested in high-emission cars anticipate purchasing to dodge the malus? We use monthly new car registration data from Italy from January 2017 to December 2022, a period during which the policy was revised multiple times. The revisions concerned the eligible CO2 emissions bands, maximum vehicle price, and the bonus or malus amounts, providing variation that we exploit to identify the effect of the bonus and malus. We find that new car sales were significantly affected by the bonus, but not by the malus. Our models attribute to the bonus an increase of about 22% in the sales of bonus-eligible vehicles. The “additionality” is however modest (10%-20%), which implies pervasive free riding (80%-90%). We find evidence of anticipation effects, with sales of vehicles eligible for future incentives decreasing in the months between the passage of the law (Dec. 2018) and the program’s onset (Mar. 2019). This “anticipation” effect accounts for 21%-45% of the sales attributable to the bonus program. | |