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Vehicle size choice and automobile externalities: A dynamic analysis

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  • Winston, Clifford
  • Yan, Jia

Abstract

We study the effect of highway congestion on the “arms race” on American roads, which has led to larger and more powerful vehicles that reduce safety and increase fuel consumption. We develop a new methodology to estimate a dynamic vehicle size choice and replacement model and find that congestion delays affect vehicle sizes. We then show that by addressing complementary externalities – congestion and the externalities associated with larger vehicle sizes – congestion pricing could reduce the vehicle fatality rate, generating $25 billion in annual benefits, and could improve vehicle fleet fuel efficiency, generating roughly $10 billion in annual operating cost savings.

Suggested Citation

  • Winston, Clifford & Yan, Jia, 2021. "Vehicle size choice and automobile externalities: A dynamic analysis," Journal of Econometrics, Elsevier, vol. 222(1), pages 196-218.
    • Handle: RePEc:eee:econom:v:222:y:2021:i:1:p:196-218
    DOI: 10.1016/j.jeconom.2020.07.032
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    References listed on IDEAS

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    More about this item

    Keywords

    Automobile demand; Dynamic discrete choice; Vehicle size; Congestion; Automobile externalities;
    All these keywords.

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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