Fuel may be taxed to cover the environmental costs associated with fuel consumption by road vehicles. Fuel taxation represents a large source of government revenue, especially in Europe and particularly in France. Furthermore, different levels of fuel taxation often have been used as a way to support an industrial sector. In France, the main fuel tax is lower for diesel fuel than for gasoline. From an environmental viewpoint, several studies show that gasoline is overtaxed and diesel fuel is undertaxed. But from the users' viewpoint, diesel-powered cars are appealing: they are more fuel-efficient, and their fuel is cheaper (at least in France and several other European countries). However, diesel cars are more expensive to purchase, partly because automakers capture part of the expected gains. A change in the fuel taxation levels thus is expected to affect how households and businesses choose engine types, and in response, automakers would change their pricing strategies. The expected outcome is undetermined. Insights into this question are given by using French data to model the demand and the supply sides of the car market. Expected long-term outcomes of different taxation schemes are given at the car fleet level for France. A 60% increase in the diesel fuel tax would bring about a decrease in the dieselization rate at the fleet level from 64% to 45% between 2011 and 2030 and a decrease in overall carbon dioxide (CO2) emissions of passenger cars by 3.5%, whereas a scheme including a decreased gasoline tax could bring about an increase in CO2 emissions.


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    Title :

    Reconsidering the Choice between Gasoline- and Diesel-Powered Cars


    Subtitle :

    Modeling Demand and Automakers' Reactions


    Additional title:

    Transportation Research Record: Journal of the Transportation Research Board


    Contributors:


    Publication date :

    2013-01-01




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English