Bounds and Bunching: Distributions of Air Pollutants Produced by New Automobiles

Josef Montag; Marek Litzman

Bounds and Bunching: Distributions of Air Pollutants Produced by New Automobiles

2015

Josef Montag | Marek Litzman

Euro norms set limits on per-kilometer emissions of air pollutants produced by new cars. Satisfying these limits is always costly, the existing models generally assume that cars are produced as to just satisfy the norms. This theory predicts bunching of measured emissions below the limits. We find this not to be consistent with the data. In fact, medians of measured emissions are often at around one half or less of the respective limit and are supported by wide distributions. Implications for optimum tax policies are briefly discussed.

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