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Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives

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  • Soren T. Anderson
  • Ian W. H. Parry
  • James M. Sallee
  • Carolyn Fischer

Abstract

This article discusses automobile fuel economy standards in the United States and other countries. We first describe how these programs affect the automobile market, including impacts on fuel consumption and other dimensions of the vehicle fleet. We then review two different methodologies for assessing the costs of fuel economy programs--engineering and market-based approaches--and discuss what the results of these assessments imply for policy. Next we compare the welfare effects of fuel economy standards and fuel taxes and discuss whether these two types of policies can be complementary. Finally, we review arguments for transitioning away from fuel economy regulations and toward a "feebate" system, a policy approach that imposes fees on vehicles that are fuel inefficient and provides rebates to those that are fuel efficient. Copyright 2011, Oxford University Press.

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Bibliographic Info

Article provided by Association of Environmental and Resource Economists in its journal Review of Environmental Economics and Policy.

Volume (Year): 5 (2011)
Issue (Month): 1 (Winter)
Pages: 89-108

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Handle: RePEc:oup:renvpo:v:5:y:2011:i:1:p:89-108

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References

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  1. Sarah E. West & Roberton C. Williams III, 2002. "Estimates from a Consumer Demand System: Implications for the Incidence of Environmental Taxes," NBER Working Papers 9152, National Bureau of Economic Research, Inc.
  2. Soren T. Anderson & James M. Sallee, 2011. "Using Loopholes to Reveal the Marginal Cost of Regulation: The Case of Fuel-Economy Standards," American Economic Review, American Economic Association, vol. 101(4), pages 1375-1409, June.
  3. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, vol. 33(6), pages 757-775, April.
  4. Fischer, Carolyn, 2005. "On the importance of the supply side in demand-side management," Energy Economics, Elsevier, vol. 27(1), pages 165-180, January.
  5. Fischer, Carolyn, 2008. "Comparing flexibility mechanisms for fuel economy standards," Energy Policy, Elsevier, vol. 36(8), pages 3106-3114, August.
  6. Thomas Klier & Joshua Linn, 2012. "New‐vehicle characteristics and the cost of the Corporate Average Fuel Economy standard," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 186-213, 03.
  7. Aldy, Joseph E. & Krupnick, Alan J. & Newell, Richard G. & Parry, Ian W.H. & Pizer, William A., 2009. "Designing Climate Mitigation Policy," Discussion Papers dp-08-16, Resources For the Future.
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  13. Tol, Richard S. J., 2008. "The Economic Impact of Climate Change," Papers WP255, Economic and Social Research Institute (ESRI).
  14. Parry, Ian & Fischer, Carolyn & Harrington, Winston, 2004. "Should Corporate Average Fuel Economy (CAFE) Standards Be Tightened?," Discussion Papers dp-04-53, Resources For the Future.
  15. Steve Newbold & Charles Griffiths & Christopher C. Moore & Ann Wolverton & Elizabeth Kopits, 2010. "The "Social Cost of Carbon" Made Simple," NCEE Working Paper Series 201007, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Aug 2010.
  16. Kahn, James A, 1986. "Gasoline Prices and the Used Automobile Market: A Rational Expectations Asset Price Approach," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 323-39, May.
  17. Philippe Barla & Stef Proost, 2008. "Automobile fuel efficiency policies with international innovation spillovers," Center for Economic Studies - Discussion papers ces0817, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
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Citations

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Cited by:
  1. Julie Rozenberg & Adrien Vogt-Schilb & Hallegatte Stéphane, 2013. "Efficiency and Acceptability of Climate Policies: Race Against the Lock-ins," Post-Print hal-00916861, HAL.
  2. Massimo Anna Alberini & Massimo Filippini & Markus Bareit, 2014. "Does the Swiss Car Market Reward Fuel Efficient Cars? Evidence from Hedonic Pricing Regressions, Matching and a Regression Discontinuity Design," CER-ETH Economics working paper series 14/190, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  3. Adriaan Perrels & Tarja Tuovinen, 2012. "The Effectiveness of Differentiation of the Finnish Car Purchase Tax according to Carbon Dioxide Emission Performance," Research Reports 168, Government Institute for Economic Research Finland (VATT).
  4. Klier, Thomas & Linn, Joshua, 2013. "Fuel prices and new vehicle fuel economy—Comparing the United States and Western Europe," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 280-300.
  5. Thomas H. Klier & Joshua Linn, 2012. "Using vehicle taxes to reduce carbon dioxide emissions rates of new passenger vehicles: evidence from France, Germany, and Sweden," Working Paper Series WP-2012-09, Federal Reserve Bank of Chicago.
  6. Hallegatte, Stephane & Fay, Marianne & Vogt-Schilb, Adrien, 2013. "Green industrial policies : when and how," Policy Research Working Paper Series 6677, The World Bank.
  7. Tsvetanov, Tsvetan & Segerson, Kathleen, 2013. "Re-evaluating the role of energy efficiency standards: A behavioral economics approach," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 347-363.
  8. Huse, Cristian & Lucinda, Claudio, 2013. "The Market Impact and the Cost of Environmental Policy: Evidence from the Swedish Green Car Rebate," MPRA Paper 48905, University Library of Munich, Germany.
  9. Werner Antweiler & Sumeet Gulati, 2013. "Market-Based Policies for Green Motoring in Canada," Canadian Public Policy, University of Toronto Press, vol. 39(s2), pages 81-94, August.
  10. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2011. "Designing Carbon Taxation Schemes for Automobiles: A Simulation Exercise for Germany," Working Papers 2011.96, Fondazione Eni Enrico Mattei.
  11. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Assessment of CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," University of Cyprus Working Papers in Economics 04-2012, University of Cyprus Department of Economics.
  12. Clifford Winston, 2013. "On the Performance of the U.S. Transportation System: Caution Ahead," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 773-824, September.
  13. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
  14. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Trade-offs in CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," Working Paper Series 33_12, The Rimini Centre for Economic Analysis.

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