The Economist: Future Gasoline Automobile Bans are as Effective as a Carbon Tax

Guest essay by Eric Worrall

According to The Economist, announcing a future ban on the sale of gasoline cars, as California just did, helps shape future expectations, and discourages investment in vehicles with a looming end of life.

Outright bans can sometimes be a good way to fight climate change

Studies show prospective bans on petrol-powered cars may be less inefficient than you think

If electric vehicles were in every way as satisfactory as alternatives, it would take little or no policy incentive to flip the market from petrol-powered cars to electric ones.

Without policy guidance, the market might grope its way towards balance. Shanjun Li and Lang Tong of Cornell University, Jianwei Xing, now of Peking University, and Yiyi Zhou of Stony Brook University estimate that a 10% rise in the availability of charging stations boosts sales of electric vehicles by 8%, and a 10% increase in the number of electric cars on the roads raises the construction of new charging points by 6%. A promise to ban sales of petrol-powered cars at a certain date stands to accelerate this process and reduce its cost by co-ordinating the expectations of firms and consumers. Both firms and households would be less likely to waste money on capital goods the lifespan of which may be unexpectedly shortened by the disappearance of complementary technologies. Other scale economies might be realised: carmakers may feel more comfortable shifting the bulk of their r&d spending towards electric vehicles, for instance, and mechanics might start preparing to service electric cars. Meanwhile, the investment in services linked to petrol-powered vehicles would shrink rapidly.

Read more: https://www.economist.com/finance-and-economics/2020/10/03/outright-bans-can-sometimes-be-a-good-way-to-fight-climate-change

The authors admit electric vehicles are inferior, then discuss the relative merits of punitive carbon taxes vs outright bans – “shoving” the population in the direction of the desired choices.

Somewhat lost in this conversation is a consideration of the impact of bans and carbon taxes on ordinary people, of the impact of ordinary people being forced to accept inferior products, because someone else thinks they have the right to dictate your consumer choices.

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October 5, 2020 at 12:50AM

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