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- W3142084311 abstract "When consumers exhibit present bias and are time-inconsistent, the standard solution to market failures caused by externalities--Pigouvian pricing--is suboptimal. I investigate policies aimed at externalities for time-inconsistent consumers. Welfare-maximizing policy in this case includes an instrument to correct the externality and an instrument to correct the present bias. Either instrument can be an incentive-based policy or a command-and-control policy. Calibrated to the US automobile market, simulation results from a model with time-inconsistent consumers suggest that the second-best gasoline tax is 18%-30% higher than marginal external damages. These simulations also suggest that social welfare is maximized with a gasoline tax set about equal to marginal external damages and a fuel economy tax that increases the price of an average non-hybrid car by about $750-$2200 relative to the price of an average hybrid car." @default.
- W3142084311 created "2021-04-13" @default.
- W3142084311 creator A5091136058 @default.
- W3142084311 date "2011-01-01" @default.
- W3142084311 modified "2023-09-28" @default.
- W3142084311 title "Optimal Policy Instruments for Externality-Producing Durable Goods Under Time Inconsistency" @default.
- W3142084311 hasPublicationYear "2011" @default.
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