Discussion Paper

Automobile Externalities and Policies

Jun 14, 2006 | Ian W.H. Parry, Margaret A. Walls, Winston Harrington

Abstract

This paper reviews theoretical and empirical literature on the measurement of the major automobile externalities, namely local pollution, global pollution, oil dependence, traffic congestion and traffic accidents. It then dicusses the rationale for traditional policies to address these externalities, including fuel taxes, fuel economy standards, emissions standards and related policies. Finally, it discusses emerging, more finely-tuned policies, such as congestion pricing and pay-as-you-drive insurance, that have become feasible with advances in electronic metering technology.