Seminar featuring Prof. Mateusz Myśliwski (NHH Norwegian School of Economics)

Prof. Mateusz Myśliwski (NHH Norwegian School of Economics) visited the Faculty of Economic Sciences at the University of Warsaw. The title of his presentation was "Charging the Elephant in the Room: EV Incentives, Market Power, and Externalities".

Prof. Myśliwski's research focuses on competition economics and topics at the intersection of industrial organization theory. In his work, he analyzes, among other things, how strategic corporate choices affect company profitability and competitiveness, and how business policies and antitrust regulations shape markets and the firms operating within them.

The event took place on June 2nd, in Lecture Hall A (WNE). The abstract of the presentation is available below.

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Abstract

We investigate the effectiveness of various tax instruments in correcting the environmental externalities (CO2 emissions, accidents, local and non-exhaust pollutants) in the Norwegian car market. Utilizing a model of household decisions on vehicle purchase and kilometers driven, we find that vehicle demand is highly responsive to price, with an estimated price elasticity of -3.8. Driving behavior is less sensitive to per-kilometer costs, with estimated elasticities ranging between -0.4 and -0.5. A central finding of the study is the critical role of market power; multi-product manufacturers set sizable markups (≈ 30%) that significantly exceed social marginal costs and curtail new-car sales. Furthermore, the analysis reveals that accounting for driving heterogeneity and spatial heterogeneity is essential for addressing distributional concerns in policy design. While Norway's current regime of high registration taxes and broad electric vehicle (EV) exemptions successfully drove adoption, there seems to be a road for improvement; it performs worse than a no-tax benchmark due to fiscal costs and distorted allocations. Additionally, while weight-based taxes can target non-exhaust emissions, the engine type remains the primary driver of external costs, and corrective measures must be carefully balanced against existing market power distortions.