Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect
AbstractWe estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a pooled cross section of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and allows the rebound effect to vary with income, urbanization, and the fuel cost of driving. At sample averages of variables, our simultaneous-equations estimates of the short- and long-run rebound effect are 4.5% and 22.2%. But rising real income caused it to diminish substantially over the period, aided by falling fuel prices. With variables at 1997-2001 levels, our estimates are only 2.2% and 10.7%, considerably smaller than values typically assumed for policy analysis. With income at the 1997 â€“ 2001 level and fuel prices at the sample average, the estimates are 3.1% and 15.3%, respectively.
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Bibliographic InfoPaper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 050603.
Length: 46 pages
Date of creation: Mar 2006
Date of revision:
Carbon dioxide; Fuel economy; Travel demand; Motor vehicle use; Rebound effect;
Other versions of this item:
- Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
- Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-03 (All new papers)
- NEP-ENE-2006-09-03 (Energy Economics)
- NEP-URE-2006-09-03 (Urban & Real Estate Economics)
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