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The Nonpecuniary Costs of Automobile Emissions Standards

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  • Timothy F. Bresnahan
  • Dennis A. Yao

Abstract

An important component of the costs of automotive air-pollution control has been nonpecuniary: a decline in vehicle performance characteristics. This regulatory impact on what the auto industry calls "drivability" has never been quantified, although there is considerable reason to believe that it has been a major component of the costs of some of the auto emissions standards of the last decade. We develop a methodology for econometric assessment of such costs, and apply it to the automobile air pollution standards of 1972-1981. We find that these costs are important. For the first standards implemented in the 1970s they exceeded the costs of pollution control equipment installed on the car and the costs of decreased fuel efficiency. Since then, however, advances in compliance technology have allowed increases in automobile quality so that incremental costs of recent standards are much lower than previously believed.

Suggested Citation

  • Timothy F. Bresnahan & Dennis A. Yao, 1985. "The Nonpecuniary Costs of Automobile Emissions Standards," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 437-455, Winter,.
  • Handle: RePEc:rje:randje:v:16:y:1985:i:winter:p:437-455
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    Cited by:

    1. Kahn, Matthew E. & Schwartz, Joel, 2008. "Urban air pollution progress despite sprawl: The "greening" of the vehicle fleet," Journal of Urban Economics, Elsevier, vol. 63(3), pages 775-787, May.
    2. Franckx, Laurent, 2014. "Regulatory emission limits for mobile sources and the Porter hypothesis: a survey of the literature," MPRA Paper 56448, University Library of Munich, Germany.
    3. Steven Berry & James Levinsohn & Ariel Pakes, 1993. "Automobile Prices in Market Equilibrium: Part I and II," NBER Working Papers 4264, National Bureau of Economic Research, Inc.
    4. Puller, Steven L., 2006. "The strategic use of innovation to influence regulatory standards," Journal of Environmental Economics and Management, Elsevier, vol. 52(3), pages 690-706, November.
    5. repec:eee:ijrema:v:33:y:2016:i:4:p:907-923 is not listed on IDEAS
    6. Xiao, Junji & Ju, Heng, 2011. "The impacts of air-pollution motivated automobile consumption tax adjustments of China," MPRA Paper 27743, University Library of Munich, Germany.
    7. Robert C. Feenstra, 1993. "Measuring the Welfare Effect of Quality Change: Theory and Application of Japanese Autos," NBER Working Papers 4401, National Bureau of Economic Research, Inc.

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