Published in Transportation Research – nov 2026 –  Part A: Policy and Practice – Volume 213

Feebates applied to new vehicles are widely used to reduce emissions from the automobile sector, yet most vehicles are traded in second-hand markets. This paper studies how interactions between new and used car markets affect the distributional incidence of a car feebate. Using comprehensive French administrative data on vehicle transactions over the period 2008–2019 and detailed information on used car prices, we develop an accounting framework linking the feebate spillover to vehicle depreciation.

We find that over half of the initial feebate is redistributed through used car markets within five years, with important consequences for incidence. Corporate buyers, who face the largest direct tax on new cars, recover approximately two-thirds of their burden through resale and end up close to neutral overall. Among private households, the burden shifts further towards high-income groups, who purchase both more new and more recent used cars. Yet the feebate remains progressive: the net burden as a share of income increases with household income, whether accounting for used car markets or not. These results suggest that the distributional effects of vehicle regulations cannot be assessed on the basis of new car markets alone, and that corporate buyers play a key role in transmitting feebate costs across the car lifecycle.