(Wiley, 2018) Miravete, Eugenio J.; Thurk, Jeff; Moral, María J.
Import tarifs have decreased signi cantly over the past 30 years due to a large number of economic integration agreements. We investigate whether national policies can be an efective replacement for tarifs to protect domestic industry. Our focus is the European automobile market where we show fuel taxes and vehicle emissions policy favored diesel vehicles, a technology popular with European consumers but largely ofered only by domestic automakers. We estimate a discrete choice, oligopoly model of horizontally diferentiated products using Spanish automobile registration data where we observe engine type. We show European automakers bene ted from pro-diesel fuel taxes and a lenient NOx emissions policy to earn signi cant pro ts from diesel cars. Had regulators used policies which did not favor diesels, consumers would have shifted consumption towards gasoline-powered imports. We show both policies amounted to signi cant non-tarif trade policies equivalent to an import tarif between two to three times the ofcial rate.
