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The Rebound Effect for Passenger Vehicles

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  • Linn, Joshua

    ()
    (Resources for the Future)

Abstract

Increasingly stringent fuel economy standards will reduce per-mile driving costs and may raise vehicle miles traveled, which is referred to as the rebound effect. All previous estimates impose at least one of three behavioral assumptions: (a) fuel economy is uncorrelated with other vehicle attributes; (b) fuel economy is uncorrelated with attributes of other vehicles owned by the household; and (c) the effect of gasoline prices on vehicle miles traveled is inversely proportional to the effect of fuel economy. Relaxing these assumptions yields a large and robust rebound effect; a one percent fuel economy increase raises driving 0.2 to 0.4 percent.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-13-19.

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Date of creation: 08 Jul 2013
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Handle: RePEc:rff:dpaper:dp-13-19

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Keywords: fuel economy standards; passenger vehicles; vehicle miles traveled; household driving demand;

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  1. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2013. "Are Consumers Myopic? Evidence from New and Used Car Purchases," American Economic Review, American Economic Association, vol. 103(1), pages 220-56, February.
  2. 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.
  3. 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.
  4. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
  5. Manuel Frondel & Nolan Ritter & Colin Vance, 2010. "Heterogeneity in the Rebound Eff ect – Further Evidence for Germany," Ruhr Economic Papers 0227, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  6. Thomas H. Klier & Joshua Linn, 2009. "The price of gasoline and the demand for fuel economy: evidence from monthly new vehicles sales data," Working Paper Series WP-09-15, Federal Reserve Bank of Chicago.
  7. Li, Shanjun & Linn, Joshua & Muehlegger, Erich, 2012. "Gasoline Taxes and Consumer Behavior," Working Paper Series rwp12-006, Harvard University, John F. Kennedy School of Government.
  8. Ye Feng & Don Fullerton & Li Gan, 2005. "Vehicle Choices, Miles Driven, and Pollution Policies," NBER Working Papers 11553, National Bureau of Economic Research, Inc.
  9. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
  10. Mark R. Jacobsen, 2013. "Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 148-87, May.
  11. Christopher R. Knittel & Ryan Sandler, 2013. "The Welfare Impact of Indirect Pigouvian Taxation: Evidence from Transportation," NBER Working Papers 18849, National Bureau of Economic Research, Inc.
  12. Hunt Allcott & Nathan Wozny, 2012. "Gasoline Prices, Fuel Economy, and the Energy Paradox," NBER Working Papers 18583, National Bureau of Economic Research, Inc.
  13. Greene, David L., 2012. "Rebound 2007: Analysis of U.S. light-duty vehicle travel statistics," Energy Policy, Elsevier, vol. 41(C), pages 14-28.
  14. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
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