Working Paper: NBER ID: w16370
Authors: Soren T. Anderson; Carolyn Fischer; Ian Parry; James M. Sallee
Abstract: This paper discusses fuel economy regulations in the United States and other countries. We first describe how these programs affect the automobile market, including their impacts on fuel use and other dimensions of the vehicle fleet. We then review different methodologies for assessing the costs of fuel economy regulations and discuss what the results of these methodologies imply for policy. Following that, we compare the welfare effects of fuel economy regulations to those of fuel taxes and assess whether or not these two policies can be complements. Finally, we review arguments for transitioning away from fuel economy regulations towards a "feebate" system.
Keywords: fuel economy; regulations; automobile market; welfare effects; feebate system
JEL Codes: H21; Q48; Q58; R48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Fuel economy regulations (R48) | Improved vehicle efficiency (L92) |
| Improved vehicle efficiency (L92) | Reduced CO2 emissions (H23) |
| Fuel economy regulations (R48) | Automakers redesign vehicles (L62) |
| Automakers redesign vehicles (L62) | Consumer choices (D19) |
| Fuel economy regulations (R48) | Market dynamics (D49) |
| Improved fuel economy (Q41) | Increased driving (R48) |
| Increased driving (R48) | Overall fuel consumption (L91) |
| Increased driving (R48) | CO2 emissions (L94) |
| Feebate system (H23) | Efficiency gains (D61) |
| Fuel economy standards (R48) | Overall welfare effects (D69) |
| Fuel economy standards (R48) | Consumer misperceptions (D18) |
| Consumer misperceptions (D18) | Suboptimal vehicle choices (L92) |