How do Fuel Taxes Impact Rebound Effect? Empirical Evidence from French Households

Abstract

Energy efficiency improvements is a mechanism used to try to reduce energy consumption. But it may have perverse effects. When the energy performance of a device is improved, the cost of this service for consumers decreases for consumers, which may encourage them to consume a larger amount of this service. The magnitude of this effect, called rebound effect, is still in debate. We measure this effect for individual transport use in France. We show the rebound effect is dependent on the characteristics of the household (income level, geographical location). We use econometric results to simulate environmental taxation policies.