Balancing Equity and Effectiveness for Electric Vehicle Subsidies
This working paper considers the welfare and distributional effects of electric vehicle subsidies.
Subsidizing greenhouse-gas-reducing consumer products is politically popular, but recent literature on subsides ignore effects on product entry and interactions with other climate policies. This paper considers welfare and distributional effects of subsidies for electric vehicles. I compare subsidy scenarios using a new equilibrium model of the US new vehicles market that endogenizes vehicle entry and accounts for interactions among subsidies and other policies. Income-based subsidies are more effective and more equitable than uniform subsidies. Accounting for interactions with other policies substantially reduces estimated efficacy and increases progressivity of income-based subsidies.
Read the full working paper here.
Common Resources — Jan 21, 2022
Is There a Trade-off Between Equity and Effectiveness for Electric Vehicle Subsidies?
A new analysis from Resources for the Future shows that subsidies for electric vehicles are more equitable when aimed at lower incomes. Though all the subsidies here tend to benefit lower-income households, the income-based subsidy is most progressive.
Press Release — Jan 21, 2022
Combining Transportation Policies Increases Equity, Reduces Efficacy of Electric Vehicle Subsidies
New research finds that subsidizing electric vehicles is progressive, although modest subsidies may not affect sales in the near term given interactions with other policies.