Evaluating CO2 reduction policy mixes in the automotive sector

This paper presents an agent-based model that simulates the market for passenger cars in which firm strategies, market structure, consumer choices and policy instruments co-evolve. The main contribution of the paper is to explore the ways in which mixes of heterogeneous policy instruments impact on economic and technological decisions of firms, consumers' purchase decisions, global CO2 emissions and public finance. We exhibit how the dynamics of the system can lead to a technological lock-in into internal combustion technologies and demonstrate the ways in which policy instruments can help to break this lock-in. We address the complementary, synergetic or contrasting effects between policy instruments. We show that policy mixes can be relevant to achieve the best of different stand-alone policy instruments, but not necessarily all policy mixes. Ex ante evaluation is therefore recommended.