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Vehicle miles (not) traveled: Fuel economy requirements, vehicle characteristics, and household driving

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  • West, Jeremy
  • Hoekstra, Mark
  • Meer, Jonathan
  • Puller, Steven L.

Abstract

A major concern with addressing the negative externalities of gasoline consumption by regulating fuel economy, rather than increasing fuel taxes, is that households respond by driving more. This paper exploits a discrete threshold in the eligibility for Cash for Clunkers to show that fuel economy restrictions lead households to purchase vehicles that have lower cost-per-mile, but are also smaller and lower-performance. Whereas the former effect can increase driving, the latter effect can reduce it. Results indicate that these households do not drive more, suggesting that behavioral responses do not necessarily undermine the effectiveness of fuel economy restrictions at reducing gasoline consumption.

Suggested Citation

  • West, Jeremy & Hoekstra, Mark & Meer, Jonathan & Puller, Steven L., 2017. "Vehicle miles (not) traveled: Fuel economy requirements, vehicle characteristics, and household driving," Journal of Public Economics, Elsevier, vol. 145(C), pages 65-81.
  • Handle: RePEc:eee:pubeco:v:145:y:2017:i:c:p:65-81
    DOI: 10.1016/j.jpubeco.2016.09.009
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sheldon, Tamara L. & Dua, Rubal, 2018. "Gasoline savings from clean vehicle adoption," Energy Policy, Elsevier, vol. 120(C), pages 418-424.
    2. Antonio M. Bento & Mark R. Jacobsen & Christopher R. Knittel & Arthur A. van Benthem, 2019. "Estimating the Costs and Benefits of Fuel-Economy Standards," NBER Chapters, in: Environmental and Energy Policy and the Economy, volume 1, pages 129-157, National Bureau of Economic Research, Inc.
    3. Yoo, Sunbin & Koh, Kyung Woong & Yoshida, Yoshikuni & Wakamori, Naoki, 2019. "Revisiting Jevons's paradox of energy rebound: Policy implications and empirical evidence in consumer-oriented financial incentives from the Japanese automobile market, 2006–2016," Energy Policy, Elsevier, vol. 133(C).
    4. Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.
    5. Donna, Javier D., 2018. "Measuring Long-Run Price Elasticities in Urban Travel Demand," MPRA Paper 92233, University Library of Munich, Germany.
    6. Sheldon, Tamara L. & Dua, Rubal, 2019. "Assessing the effectiveness of California's “Replace Your Ride”," Energy Policy, Elsevier, vol. 132(C), pages 318-323.
    7. Waldemar Marz & Frank Goetzke, 2019. "CAFE in the City – A Spatial Analysis of Fuel Economy Standards," ifo Working Paper Series 292, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

    More about this item

    Keywords

    Fuel economy; Rebound effect; Regression discontinuity;

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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