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Vehicle taxation based on CO 2 emissions is increasingly being adopted worldwide in order to shift consumer purchases to low-carbon cars, yet evidence on its effectiveness and economic impact is limited. We focus on feebate schemes, which impose a fee on high-carbon vehicles and give a rebate to low-carbon automobiles. We estimate demand for automobiles in Germany and simulate the impact of alternative feebate schemes on emissions, consumer welfare, public revenues and firm profits. We finddoi:10.2139/ssrn.1991748 fatcat:eps6l5cwjnesrdtxnatwuuifwq