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How do US passenger vehicle fuel economy standards affect new vehicle purchases?

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  • Dou, Xiaoya
  • Linn, Joshua

Abstract

Like many energy efficiency standards, passenger vehicle fuel economy and greenhouse gas standards apply to new but not used products. In theory, such vintage differentiated regulation could reduce demand for new vehicles, which would reduce the social welfare gains of tighter standards. Using household data from 1996 to 2016, which includes periods of stable standards and periods of tightening standards, we provide the first direct evidence of the effects of standards on new vehicle purchases. Tighter standards induce statistically and economically significant reductions in new vehicle purchases, which raises welfare costs of tighter standards modestly.

Suggested Citation

  • Dou, Xiaoya & Linn, Joshua, 2020. "How do US passenger vehicle fuel economy standards affect new vehicle purchases?," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:jeeman:v:102:y:2020:i:c:s0095069620300553
    DOI: 10.1016/j.jeem.2020.102332
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    References listed on IDEAS

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    Cited by:

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    4. Leard, Benjamin & Linn, Joshua & Springel, Katalin, 2023. "Vehicle Attribute Tradeoffs and the Distributional Effects of US Fuel Economy and Greenhouse Gas Emissions Standards," RFF Working Paper Series 23-04, Resources for the Future.

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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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