subsidy for electric vehicles and the optimal ban on the production of gasoline vehicles both give about the same efficiency … electricity generation, the increasing substitutability of electric for gasoline vehicles, and the durability of the vehicle stock … improvement, but the latter leads to a sharp increase in gasoline vehicle production just before the ban. Phasing out gasoline …

subsidy for electric vehicles and the optimal ban on the production of gasoline vehicles both give about the same efficiency … electricity generation, the increasing substitutability of electric for gasoline vehicles, and the durability of the vehicle stock … improvement, but the latter leads to a sharp increase in gasoline vehicle production just before the ban. Phasing out gasoline …

. We, first, derive analytically the optimal subsidy in a spatial partial equilibrium model of a city with two zones where … vehicles and electric vehicles. There we find that the optimal subsidy rate is the sum of changes in externality costs … simulations to calculate sign and size of the optimal subsidy or tax rate. This model is calibrated to a typical German …