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The Regulation of Fuel Economy and the Demand for "Light Trucks."

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  • Godek, Paul E

Abstract

The Corporate Average Fuel Economy Standard mandates fleet-average miles-per-gallon minimums for passenger vehicles sold in the United States. Among other things, the standard is intended to induce consumers to substitute small cars for large cars. While the standard has reduced the average weight of cars, it has also stimulated the demand for an Increasingly popular class of vehicles known as light trucks. The substitution to light trucks has mitigated, but not eliminated, the deleterious effects of the standard on vehicle safety. The effect of the standard on car weights and light-truck sales provides an opportunity to observe a novel manifestation of Sam Peltzman's "offsetting-behavior" hypothesis. That effect and others are analyzed here in the context of the political economy of the Corporate Average Fuel Economy Standard. Copyright 1997 by the University of Chicago.

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  • Godek, Paul E, 1997. "The Regulation of Fuel Economy and the Demand for "Light Trucks."," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 495-509, October.
    • Handle: RePEc:ucp:jlawec:v:40:y:1997:i:2:p:495-509
    DOI: 10.1086/467381
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    References listed on IDEAS

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    1. Magee,Stephen P. & Brock,William A. & Young,Leslie, 1989. "Black Hole Tariffs and Endogenous Policy Theory," Cambridge Books, Cambridge University Press, number 9780521377003.
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    3. Peterson, Steven & Hoffer, George & Millner, Edward, 1995. "Are Drivers of Air-Bag-Equipped Cars More Aggressive? A Test of the Offsetting Behavior Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 251-264, October.
    4. John E. Kwoka, 1983. "The Limits of Market-Oriented Regulatory Techniques: The Case of Automotive Fuel Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(4), pages 695-704.
    5. Paul E. Godek, 1991. "Foreign Profits and the Political Economy of Quotas," Cato Journal, Cato Journal, Cato Institute, vol. 11(1), pages 123-134, Spring/Su.
    6. Kleit, Andrew N, 1990. "The Effect of Annual Changes in Automobile Fuel Economy Standards," Journal of Regulatory Economics, Springer, vol. 2(2), pages 151-172, June.
    7. Peltzman, Sam, 1975. "The Effects of Automobile Safety Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 677-725, August.
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    Cited by:

    1. Rasha Ahmed & Kathleen Segerson, 2007. "Emissions Control and the Regulation of Product Markets: The Case of Automobiles," Working papers 2007-40, University of Connecticut, Department of Economics.
    2. Ando, Amy Whritenour & Brozovic, Nicholas, 2004. "Defensive purchasing and motor-vehicle policy effectiveness," 2004 Annual meeting, August 1-4, Denver, CO 20404, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    4. Brozovic, Nicholas & Ando, Amy Whritenour, 2009. "Defensive purchasing, the safety (dis)advantage of light trucks, and motor-vehicle policy effectiveness," Transportation Research Part B: Methodological, Elsevier, vol. 43(5), pages 477-493, June.
    5. Timilsina, Govinda R. & Dulal, Hari B., 2009. "Regulatory instruments to control environmental externalities from the transport sector," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 41, pages 80-112.
    6. Timilsina, Govinda R. & Dulal, Hari B., 2009. "A review of regulatory instruments to control environmental externalities from the transport sector," Policy Research Working Paper Series 4867, The World Bank.
    7. Shiau, Ching-Shin Norman & Michalek, Jeremy J. & Hendrickson, Chris T., 2009. "A structural analysis of vehicle design responses to Corporate Average Fuel Economy policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 814-828, November.

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