Global environmental policies with innovation spillovers
Management of Environmental Quality
ISSN: 1477-7835
Article publication date: 7 March 2019
Issue publication date: 15 May 2019
Abstract
Purpose
The purpose of this paper is to explore automobile fuel efficiency policies in the presence of two externalities: a global environmental problem and international innovation spillovers.
Design/methodology/approach
Using a simple model with two regions, the authors show that both a fuel tax and a tax on vehicles based on their fuel economy rating are needed to decentralize the first best.
Findings
If standards are used instead of taxes, the authors find that spillovers may alleviate free-riding. Under some conditions, a strict standard in one region may favor the adoption of a strict standard in the other one.
Originality/value
The authors also show that if policies are not coordinated between regions, the resulting gas taxes will be set too low and each region will use the tax on fuel rating to reduce the damage caused by foreign drivers.
Keywords
Citation
Kumar, M. (2019), "Global environmental policies with innovation spillovers", Management of Environmental Quality, Vol. 30 No. 4, pp. 833-850. https://doi.org/10.1108/MEQ-05-2018-0098
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited