Columbia International Affairs Online: Working Papers

CIAO DATE: 10/2008

Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology

Kelly Sims Gallagher, Erich Muehlegger

February 2008

Belfer Center for Science and International Affairs, Harvard University

Abstract

 

Federal, state and local governments use a variety of incentives to induce consumer adoption of hybrid-electric vehicles. In this paper, Kelly Sims Gallagher and Erich Muehlegger study the relative efficacy of state sales tax waivers, income tax credits and non-tax incentives, attributing just 6% of existing hybrid sales to tax incentive schemes, approximately 33% to personal (social) preferences, and 27% to rising gas prices. Their work suggests several important implications for policy intended to stimulate accelerated consumer purchase of hybrid-vehicle technology.