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Should Corporate Average Fuel Economy (CAFE) Standards Be Tightened?

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Author Info
Parry, Ian () (Resources for the Future)
Fischer, Carolyn () (Resources for the Future)
Harrington, Winston () (Resources for the Future)

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Abstract

This paper develops analytical and numerical models to explain and estimate the welfare effects of raising Corporate Average Fuel Economy (CAFE) standards for new passenger vehicles. The analysis encompasses a wide range of scenarios concerning consumers’ valuation of fuel economy and the full economic costs of adopting fuel-saving technologies. It also accounts for, and improves estimates of, CAFE’s impact on externalities from local and global pollution, oil dependence, traffic congestion, and accidents. The bottom line is that it is difficult to make an airtight case either for or against tightening CAFE on pure efficiency grounds, as the magnitude and direction of the welfare change varies across different, plausible scenarios.

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Publisher Info
Paper provided by Resources For the Future in its series Discussion Papers with number dp-04-53.

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Date of creation: 20 Dec 2004
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Handle: RePEc:rff:dpaper:dp-04-53

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Related research
Keywords: fuel economy standards; oil dependency; carbon emissions; rebound effect; gasoline tax;

Find related papers by JEL classification:
R48 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government Pricing; Regulatory Policies
Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  5. J. Daniel Khazzoom, 1997. "Impact of Pay-at-the-Pump on Safety Through Enhanced Vehicle Fuel Efficiency," The Energy Journal, International Association for Energy Economics, vol. 18(3), pages 103-133.
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    Other versions:
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    Other versions:
  12. Thorpe, Steven G, 1997. "Fuel Economy Standards, New Vehicle Sales, and Average Fuel Efficiency," Journal of Regulatory Economics, Springer, vol. 11(3), pages 311-26, May. [Downloadable!] (restricted)
  13. Dreyfus, Mark K & Viscusi, W Kip, 1995. "Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency," Journal of Law & Economics, University of Chicago Press, vol. 38(1), pages 79-105, April.
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  16. Richard S.J. Tol & Samuel Fankhauser & Richard G. Richels & Joel B. Smith, 2000. "How Much Damage Will Climate Change Do? Recent Estimates," Working Papers FNU-2, Research unit Sustainability and Global Change, Hamburg University, revised Sep 2000. [Downloadable!]
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  19. Goulder, Lawrence H. & Parry, Ian W. H. & Williams III, Roberton C. & Burtraw, Dallas, 1999. "The cost-effectiveness of alternative instruments for environmental protection in a second-best setting," Journal of Public Economics, Elsevier, vol. 72(3), pages 329-360, June. [Downloadable!] (restricted)
    Other versions:
  20. Yee, Jet, 1991. "Effect of consumption standards on U.S. gasoline consumption," Journal of Policy Modeling, Elsevier, vol. 13(2), pages 205-227. [Downloadable!] (restricted)
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  23. Parry, Ian & Small, Kenneth, 2002. "Does Britain or the United States Have the Right Gasoline Tax?," Discussion Papers dp-02-12-, Resources For the Future. [Downloadable!]
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stavins, Robert, 2005. "The Effects of Vintage-Differentiated Environmental Regulation," Discussion Papers dp-05-12, Resources For the Future. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!]
  3. Parry, Ian W.H., 2006. "Are the Costs of Reducing Greenhouse Gases from Passenger Vehicles Negative?," Discussion Papers dp-06-14-rev, Resources For the Future. [Downloadable!]
    Other versions:
  4. Eskeland, Gunnar S. & Mideksa, Torben K., 2008. "Transportation fuel use, technology and standards: The role of credibility and expectations," Policy Research Working Paper Series 4695, The World Bank. [Downloadable!]
  5. Parry, Ian, 2005. "Is Pay-As-You-Drive Insurance a Better Way to Reduce Gasoline than Gasoline Taxes?," Discussion Papers dp-05-15, Resources For the Future. [Downloadable!]
    Other versions:
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