IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v37y2016i2p257-288.html

The Rebound Effect for Passenger Vehicles

Author

Listed:
  • Joshua Linn

Abstract

The United States and many other countries are dramatically tightening fuel economy standards for passenger vehicles. Higher fuel economy reduces per-mile driving costs and may increase miles traveled, known as the rebound effect. The magnitude of the elasticity of miles traveled to fuel economy is an important parameter in welfare analysis of fuel economy standards, but all previous estimates from micro data impose at least one of three behavioral assumptions: (a) fuel economy is uncorrelated with vehicle and household attributes; (b) for multivehicle households, each vehicle can be treated as an independent observation in statistical analysis; and (c) the effect of gasoline prices on vehicle miles traveled is inversely proportional to the effect of fuel economy. Two approaches to relaxing these assumptions yield a large estimate of the rebound effect; a one percent fuel economy increase raises driving 0.2 or 0.4 percent, depending on the approach, but the estimates are not statistically significantly different from one another.

Suggested Citation

  • Joshua Linn, 2016. "The Rebound Effect for Passenger Vehicles," The Energy Journal, , vol. 37(2), pages 257-288, April.
    • Handle: RePEc:sae:enejou:v:37:y:2016:i:2:p:257-288
    DOI: 10.5547/01956574.37.2.jlin
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.37.2.jlin
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.37.2.jlin?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Shanjun Li & Christopher Timmins & Roger H. von Haefen, 2009. "How Do Gasoline Prices Affect Fleet Fuel Economy?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 113-137, August.
    2. 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, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mattias Nasman & Grace Ballor, 2024. "The Car Industry and Climate Change: A Historical Review," GREEN Working Papers 24, GREEN, Centre for Research on Geography, Resources, Environment, Energy & Networks, Universita' Bocconi, Milano, Italy.
    2. Mamkhezri, Jamal & Khezri, Mohsen, 2024. "Vehicle miles traveled induced demand, rebound effect, and price and income elasticities: A US spatial econometric analysis," Transport Policy, Elsevier, vol. 158(C), pages 224-240.
    3. Zhang, Xiao-Bing & Fei, Yinxin & Duan, Hongbo & Soytas, Ugur & Crifo, Patricia & Sterner, Thomas, 2025. "Implicit discount rates and energy efficiency gap in air conditioning: Evidence from the Chinese market," Resource and Energy Economics, Elsevier, vol. 82(C).
    4. Arpita Asha Khanna & Ilka Dubernet & Patrick Jochem, 2025. "Do car drivers respond differently to fuel price changes? Evidence from German household data," Transportation, Springer, vol. 52(2), pages 579-613, April.
    5. 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.
    6. Nehiba, Cody, 2024. "Timing Matters: Estimating within-day variation in the rebound effect," National Center for Environmental Economics-NCEE Working Papers 348907, United States Environmental Protection Agency (EPA).
    7. Cheon, Jiyeon, 2025. "Distributional effects of a vehicle miles traveled tax over the different vehicle efficiency," Economics of Transportation, Elsevier, vol. 41(C).
    8. Zhang, Linlin & van Lierop, Dea & Ettema, Dick, 2025. "The effect of electric vehicle use on trip frequency and vehicle kilometers traveled (VKT) in the Netherlands," Transportation Research Part A: Policy and Practice, Elsevier, vol. 192(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chugh, Randy & Cropper, Maureen & Narain, Urvashi, 2011. "The cost of fuel economy in the Indian passenger vehicle market," Energy Policy, Elsevier, vol. 39(11), pages 7174-7183.
    2. Sun, Qi & Xu, Lin & Yin, Hua, 2016. "Energy pricing reform and energy efficiency in China: Evidence from the automobile market," Resource and Energy Economics, Elsevier, vol. 44(C), pages 39-51.
    3. Fei, Yinxin & Qin, Ping & Chu, Yanlai & Zheng, Huanhuan & Tan-Soo, Jie-Sheng & Zhang, Xiao-Bing, 2025. "Does high gasoline price spur electric vehicle adoption? Evidence from Chinese cities," Energy Economics, Elsevier, vol. 142(C).
    4. Whitefoot, Kate S. & Skerlos, Steven J., 2012. "Design incentives to increase vehicle size created from the U.S. footprint-based fuel economy standards," Energy Policy, Elsevier, vol. 41(C), pages 402-411.
    5. 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.
    6. Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
    7. Antonio Bento & Kevin Roth & Yiou Zuo, 2018. "Vehicle Lifetime and Scrappage Behavior: Trends in the U.S. Used Car Market," The Energy Journal, , vol. 39(1), pages 159-184, January.
    8. Beaudoin, Justin & Chen, Yuan & Heres, David R. & Kheiravar, Khaled H. & Lade, Gabriel E. & Yi, Fujin & Zhang, Wei & Lin Lawell, C.-Y. Cynthia, 2018. "Environmental Policies in the Transportation Sector: Taxes, Subsidies, Mandates, Restrictions, and Investment," ISU General Staff Papers 201808150700001050, Iowa State University, Department of Economics.
    9. Michael L. Anderson & Maximilian Auffhammer, 2014. "Pounds That Kill: The External Costs of Vehicle Weight," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 535-571.
    10. Joshua Linn, 2016. "The Rebound Effect for Passenger Vehicles," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    11. Aydin, Erdal & Brounen, Dirk & Kok, Nils, 2020. "The capitalization of energy efficiency: Evidence from the housing market," Journal of Urban Economics, Elsevier, vol. 117(C).
    12. Aydin, Erdal, 2016. "Energy conservation in the residential sector : The role of policy and market forces," Other publications TiSEM b9cedba8-1310-4097-90fb-b, Tilburg University, School of Economics and Management.
    13. 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).
    14. Rik Rozendaal & Herman Vollebergh, 2025. "Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 12(3), pages 565-598.
    15. Sallee, James M. & West, Sarah E. & Fan, Wei, 2016. "Do consumers recognize the value of fuel economy? Evidence from used car prices and gasoline price fluctuations," Journal of Public Economics, Elsevier, vol. 135(C), pages 61-73.
    16. Huang, Robert & Kahn, Matthew E., 2024. "An economic analysis of United States public transit carbon emissions dynamics," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    17. Linn, Joshua, "undated". "Explaining the Adoption of Diesel Fuel Passenger Cars in Europe," RFF Working Paper Series dp-14-08-rev, Resources for the Future.
    18. Haxhimusa, Adhurim & Liebensteiner, Mario, 2025. "Fuel prices as a driver of sustainable mobility: Impacts on traffic volume and vehicle choice," Energy Economics, Elsevier, vol. 148(C).
    19. Chao Wei & Shanjun Li, 2014. "The Cost of Greening Stimulus: A Dynamic Discrete Choice Analysis of Vehicle Scrappage Programs," Working Papers 2014-12, The George Washington University, Institute for International Economic Policy.
    20. Soren T. Anderson & Ian W. H. Parry & James M. Sallee & Carolyn Fischer, 2011. "Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 89-108, Winter.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:37:y:2016:i:2:p:257-288. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.