Research
Research
The European Union aims to have nearly all new cars be electric by 2035 utilizing a series of progressively stricter automaker emission targets. Car manufacturers either can comply with the standard or pay a fine commensurate to their emissions deviation from the target. The scale of the EU's program is unprecedented, and until now EV transitions have been largely theoretical. This paper simulates the short-run effects of the future EU emission targets on total welfare and average car emissions. I first estimate automobile demand using 2023-2024 data on new car registrations and car list prices in France, Germany, and Italy. I then construct a Nash-Bertrand equilibrium model of profit maximization with respect to the EU emission standard. Automakers face heterogeneous compliance costs, but the model does not strictly bind them to the target. Firms are free to choose to over-pollute and pay the corresponding fine. Implementing the EU's future emission targets in 2024, I find the EU could reach the 2025 target with only a 1.18% decrease in welfare. The stricter targets beginning in 2030 are unachievable and result in significant drops in consumer surplus and profits. Manufacturers' ability to lower emissions by lowering EV prices is constrained by contemporaneous EV demand. Average car emissions in the EU reach a basin of 78 g/km with the 2030 and 2035 targets while EV shares plateau at 28%. This suggests the need for policymakers to establish programs to concurrently boost consumer EV demand.
Since the end of Prohibition, alcohol has been strictly regulated at the state level. All states independently adopted three-tier systems wherein the different levels of industry (manufacturing, wholesaling, and retailing) are kept separate to varying degrees. This paper is the first to investigate the effect of allowing manufacturer to retailer sales on average state alcohol prices. Using detailed scanner data and exploiting state, temporal, and alcohol type variation in regulation, I find wine is 3.5-4.5% cheaper in states that allow direct sales than in states that forbid them and mixed evidence for beer. No significant price differences are found for liquor. This suggests these supply arrangements are an uncommon industry practice for liquor, in line with documented wholesaler concentration.
This chapter investigates heterogeneity in preferences for EVs between Norwegians and EU citizens and the sensitivity of Norway's high EV share to its remaining sales tax exemption. Combining European new car registration data with list price data, I will separately estimate random coefficients demand for automobiles in Norway and EU countries. The juxtaposition of Norwegian and EU demand provides qualitative evidence on whether long-term government EV promotion can positively affect underlying preferences. I will then test if removing government promotion, in the form of a VAT reimposition on EV cars, would negatively affect their share in Norway's post-transition society.