NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-per-Mile Limits

Lawrence H. Goulder, Mark R. Jacobsen, Arthur A. van Benthem

NBER Working Paper No. 15337
Issued in September 2009
NBER Program(s):   EEE   LE   PE

Fourteen U.S. states recently pledged to adopt limits on greenhouse gases (GHGs) per mile of light-duty automobiles. Previous analyses predicted this action would significantly reduce emissions from new cars in these states, but ignored possible offsetting emissions increases from policy-induced adjustments in new car markets in other (non-adopting) states and in the used car market.

Such offsets (or “leakage”) reflect the fact that the state-level effort interacts with the national corporate average fuel economy (CAFE) standard: the state-level initiative effectively loosens the national standard and gives automakers scope to profitably increase sales of high-emissions automobiles in non-adopting states. In addition, although the state-level effort may well spur the invention of fuel- and emissions-saving technologies, interactions with the federal CAFE standard limit the nationwide emissions reductions from such advances. Using a multi-period numerical simulation model, we find that 70-80 percent of the emissions reductions from new cars in adopting states are offset by emissions leakage.

This research examines a particular instance of a general issue of policy significance – namely, problems from “nested” federal and state environmental regulations. Such nesting implies that similar leakage difficulties are likely to arise under several newly proposed state-level initiatives.

download in pdf format
   (223 K)

email paper

This paper is available as PDF (223 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15337

Published: “Unintended Consequences from Nested State & Federal Environmental Regulation: The Case of the Pavley Greenhouse-Gas-per-Mile Limits” (with Mark R. Jacobsen and Arthur A. van Benthem), Journal of Environmental Economics and Management 63:187-207, March 2012.

Users who downloaded this paper also downloaded these:
Busse, Knittel, and Zettelmeyer w15590 Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets
Fowlie w14421 Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage
Li, von Haefen, and Timmins w14450 How Do Gasoline Prices Affect Fleet Fuel Economy?
Williams w16184 Growing State-Federal Conflicts in Environmental Policy: The Role of Market-Based Regulation
Anderson, Fischer, Parry, and Sallee w16370 Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us