The Electric Vehicle Transition and the Economics of Banning Gasoline Vehicles / Stephen P. Holland, Erin T. Mansur, Andrew J. Yates.

Format:

Book

Author/Creator:

Holland, Stephen P.

Contributor:

National Bureau of Economic Research.

Mansur, Erin T.

Yates, Andrew J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26804.

NBER working paper series no. w26804

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Electric vehicles have a unique potential to transform personal transportation. We analyze the transition to electric vehicles with a dynamic model that captures the falling costs of producing electric vehicles, the decreasing pollution from electricity generation, the increasing substitutability of electric for gasoline vehicles, and the durability of the vehicle stock. Due to the external costs from pollution, inefficiencies under business as usual result from the mix of vehicles as well as the transition timing, the severity of which depends on substitutability. We calibrate the model to the US market and find the magnitude of the inefficiency is rather modest: less than 5 percent of total external costs. The optimal purchase subsidy for electric vehicles and the optimal ban on the production of gasoline vehicles both give about the same efficiency improvement, but the latter leads to a sharp increase in gasoline vehicle production just before the ban. Phasing out gasoline vehicles with a bankable production quota reduces deadweight loss substantially more than the other policies, but may lead to a very large deadweight loss if set incorrectly.

Notes:

Print version record

February 2020.