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Do Declining Vehicle Attributes Eliminate the Direct Rebound Effect?

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Listed:
  • Fidel Gonzalez

    (Sam Houston State University Huntsville)

  • Diya Mazumder

    (Soka University of America)

Abstract

Improvements in vehicle fuel economy are often made by reducing vehicle attributes that consumers care about. We estimate the magnitude of the dampening effect of these declining vehicle attributes on the direct rebound effect. We assemble a comprehensive dataset including household-level information, vehicle attributes, gasoline prices, and state-level data. We find that the attribute adjustment mitigates the direct rebound effect by 18–23%. Our estimate of the direct rebound effect is about 0.64 to 0.66 and lies at the upper bound of most prior estimates, resulting in an overall rebound effect between 0.45 and 0.47. Our results provide a best-case scenario for the efficacy of fuel economy standards as a policy instrument to combat climate change.

Suggested Citation

  • Fidel Gonzalez & Diya Mazumder, 2025. "Do Declining Vehicle Attributes Eliminate the Direct Rebound Effect?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 51(2), pages 198-224, April.
    • Handle: RePEc:pal:easeco:v:51:y:2025:i:2:d:10.1057_s41302-024-00292-3
    DOI: 10.1057/s41302-024-00292-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Transportation; Rebound effect; Vehicle attributes; Gas tax elasticity;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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