Economics and low carbon markets: applications of empirical industrial organization

• Grant number: 20/10735-1
• Support Opportunities: Regular Research Grants
• Duration: February 01, 2021 - January 31, 2024
• Field of knowledge: Applied Social Sciences - Economics - Industrial Economics
• Principal Investigator: Cláudio Ribeiro de Lucinda
• Grantee: Cláudio Ribeiro de Lucinda
• Host Institution: Faculdade de Economia, Administração, Contabilidade e Atuária (FEA). Universidade de São Paulo (USP). São Paulo , SP, Brazil
• Associated researchers: Rodrigo Menon Simões Moita

Abstract

The research project presented here is divided into two themes, which are expected to be developed over each of the three years of the proposal. In terms of originality of contribution, each theme has both the econometric technique to be employed and the context in which it will be applied. We seek to apply the latest econometric techniques in contexts that are relevant to Brazil at the same time, as they may generate interesting conclusions for the international academic community. The first of the themes, entitled "The Effects of Welfare and Pollution from the Introduction of an Urban Toll", is related to the issue of the marked increase in congestion in the large Brazilian cities and, in response to this, the proposed measures to contain their expansion in a context of high growth in car production and sales. Within these measures, we can find from control-based alternatives - such as the Rodizio system implemented in the city of São Paulo - to alternatives based on relative prices, such as the urban toll. This policy and its effects are the objective in this first theme. More specifically, it is intended to investigate what would be an optimal toll towards internalizing the externality caused by congestion. To this end, we will use both the Origin-Destination Survey conducted by the Metrô company in 2007 as well as the Urban Mobility Survey 2014. The second and third themes deal with one of the most important innovations in Brazil, flex-fuel cars, albeit from two different points of view. The second theme deals with another important aspect of demand for multi-fuel vehicles: the incentive structure for the purchase of these vehicles. This line of research, entitled Multi-Fuel Vehicle Incentive Policies is a direct continuation of the project worked on the previous three years, taking advantage of insights developed in the article “Effects of IPI Reduction Policy on the New Automobile Market” co-authored with Luan Michel Soares Pereira. In previous publications, some of the proponents have shown that the subsidy structure used in Sweden to encourage the purchase of multi-fuel cars is inefficient in that the cost per tonne of CO2 emitted is much higher than the value of the tonne. CO2 in the carbon credit market. The next step is, with the data used in that article and a more refined demand modeling, to estimate the optimal subsidy for these vehicles in order to maximize consumer welfare given a maximum cost per ton less CO2. In this triennium, we aim to improve demand modeling. A key element for the simulations involved in calculating optimal incentives involves correctly estimating the price sensitivity (own and cross) of demand. (AU)