Article thumbnail
Location of Repository

Should Corporate Average Fuel Economy (CAFE) Standards Be Tightened?

By Ian Parry, Carolyn Fischer and Winston Harrington

Abstract

This paper develops analytical and numerical models to explain and estimate the welfare effects of raising Corporate Average Fuel Economy (CAFE) standards for new passenger vehicles. The analysis encompasses a wide range of scenarios concerning consumers’ valuation of fuel economy and the full economic costs of adopting fuel-saving technologies. It also accounts for, and improves estimates of, CAFE’s impact on externalities from local and global pollution, oil dependence, traffic congestion, and accidents. The bottom line is that it is difficult to make an airtight case either for or against tightening CAFE on pure efficiency grounds, as the magnitude and direction of the welfare change varies across different, plausible scenarios.fuel economy standards, oil dependency, carbon emissions, rebound effect, gasoline tax

OAI identifier:

Suggested articles

Citations

  1. (1999). 20Resources for the Future Fischer, Harrington, and Parry EPA,
  2. (1996). 21Resources for the Future
  3. (2002). 22Resources for the Future
  4. (2003). Adjusting own-price vehicle elasticities from the GM model We simulate a dynamic model of vehicle choice, developed by Harrington
  5. (2003). An Analysis of Alternative Forms of Automotive Fuel Economy Standards for the United States.” Paper presented at the 2003 Transportation Research Board Annual Meetings.
  6. (2002). An Assessment of the Effects of Vehicle Weight on Fatality Risk
  7. (2002). Annual Energy Review
  8. (2007). Are the Costs of Reducing Greenhouse Gases from Passenger Vehicles Negative?”
  9. (2003). Benefits of Reducing Demand for Gasoline and Diesel. California Energy Commission,
  10. (2005). Clearing the Air: The Costs and Consequences of Higher
  11. (2004). Comparing Alternative Policies to Reduce Traffic Accidents.”
  12. Corporate Average Fuel Economy Standards for MY 2005-2007 Light Trucks. National Highway Traffic Safety Administration,
  13. (2005). Economic Impacts of Tightening the Corporate Average Fuel Economy (CAFE) Standards. Report prepared for the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration,
  14. (2002). Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
  15. (2003). Effects of Climate Change Policies on the U.S. Household Transportation Sector.” Discussion paper 03-17, Resources for the Future,
  16. (2007). Empirical Estimates for Environmental Policy Making in a Second-Best Setting.”
  17. (2004). Firm Inventory Behavior and the Returns from Highway Infrastructure Investments.”
  18. (2003). Fiscal Interactions and the Case for Carbon Taxes Over Grandfathered Carbon Permits.”
  19. (1997). Fuel Economy and Motor Vehicle Emissions.”
  20. (1997). Fuel Economy Standards, New Vehicle Sales, and Average Fuel Efficiency.”
  21. (2006). Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect.”
  22. (1997). Highway Cost Allocation Study
  23. (1997). Impact of Pay-at-the-Pump on Safety Through Enhanced Vehicle Fuel Efficiency.”
  24. (2004). Impacts of Long-Range Increases in the Corporate Average Fuel Economy (CAFE)
  25. (2006). Life After Kyoto: Alternative Approaches to Global Warming Policies.”
  26. (2004). Motor Vehicle Fuel Efficiency and Traffic Fatalities.”
  27. (1997). Oil Imports: An Assessment of Benefits and Costs. Oak Ridge National Laboratory,
  28. (1995). On the Costs of Air Pollution from Motor Vehicles.”
  29. (1995). Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency.”
  30. (1997). Relationships Between Vehicle Size and Fatality Risk
  31. (1991). Short-Run Pricing Strategies to Increase Corporate Average Fuel Economy.”
  32. (2000). Statistical Abstract of the United States. Department of Commerce,
  33. (2006). Stern Review: The Economics of Climate Change.
  34. (2004). The “Arms Race” on American Roads; the Effect of Sport Utility Vehicles and Pickup Trucks on Traffic Safety.”
  35. (1998). The Costs and Benefits of Reducing Air Pollutants Related to Acid Rain.”
  36. (2000). The Economic Impact of Motor Vehicle Crashes
  37. (2003). The Economics of CAFE Reconsidered: A Response to CAFE Critics and a Case for Fuel Economy Standards.” AEI-Brookings Joint Center for Regulatory Studies, Regulatory Analysis 03-01,
  38. (1998). The Effects of the Corporate Average Fuel Efficiency Standards in the US.”
  39. (2006). The Fuel Tax and Alternatives for Transportation Funding. Transportation Research Board,
  40. (1999). The Health Costs of Motor Vehicle Related Air Pollution.”
  41. (2005). The Marginal Damage Costs of Carbon Dioxide Emissions:
  42. (2005). The Social Cost of Carbon.”
  43. (2006). Tradable Fuel Economy Credits; Competition and Oligopoly.” Discussion paper,
  44. (2004). US Military Expenditures to Protect the Use of PersianGulf Oil for Motor Vehicles. Institute of Transportation Studies,
  45. (2000). Warming the World: Economic Models of Global Warming.

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.