NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Estimating the Costs and Benefits of Fuel-Economy Standards

Antonio M. Bento, Mark R. Jacobsen, Christopher R. Knittel, Arthur A. van Benthem


This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book Environmental and Energy Policy and the Economy, Matthew Kotchen, James H. Stock, and Catherine Wolfram, editors
Conference held May 16, 2019
Forthcoming from University of Chicago Press
in NBER Book Series Environmental and Energy Policy and the Economy

Fuel-economy standards for new vehicles are a primary policy instrument in many countries to reduce the carbon footprint of the transportation sector. These standards have many channels of costs and benefit, impacting sales, composition, vehicle attributes, miles traveled and externalities in the new-car fleet, as well as the composition and size of the used fleet. We develop a tractable analytical framework to examine the welfare effects of fuel-economy standards, and apply it to the recent government proposal to roll back fuel-economy standards. We find that the rollback proposal suffers from inconsistencies due to a piecemeal equilibrium analysis; central parts of the model used to analyze the proposal do not feed back into others. We stress the importance of instead using a combined, multi-market vehicle choice model to avoid such inconsistencies. We also derive bounds that can serve as a check on the theoretical consistency of such analyses, and that offer insights into the magnitudes of potential errors resulting from imperfect multi-market integration.

download in pdf format
   (779 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

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

Contact Us