Evaluating New Policy Instruments of the Corporate Average Fuel Economy Standards : Footprint, Credit Transferring, and Credit Trading

Acknowledgements I am very grateful to my thesis advisors Ted McConnell, Maureen Cropper, and Rob Williams for their guidance. I would also like to thank Euan Phimister, Catia Montagna, Keith Bender, and two anonymous referees for helpful comments and suggestions.Peer reviewedPublisher PD

Essays on the Economics of Automobile Fuel Economy

This dissertation consists of three chapters that analyze issues relating to automobile fuel economy. Chapter 1 discusses automobile fuel economy regulations in the United States. The new U.S. Corporate Average Fuel Economy (CAFE) standards not only tighten the target fuel economy to be achieved by automakers, but also make significant changes to the design/structure of CAFE standards by introducing three policy instruments (footprint-based targets, intra-firm transferring of fuel efficiency credits between passenger cars and light trucks, and inter-firm trading of fuel efficiency credits). While there are a number of previous studies on the impact of tightening CAFE standards, economists have paid little attention to the design of CAFE standards. I use policy simulation to evaluate these policy instruments relating to the design of CAFE standards. First, I model and estimate the demand- and supply-sides of the U.S. vehicle market using various data sets. Then, based on the estimation results, I simulate the vehicle market and the demand for driving under four counterfactual CAFE policies with different designs, and examine the impacts of the three policy instruments. Simulation results suggest: (1) footprint-based targets have little impact on market shares, producer profits, consumer surplus, and gasoline use; (2) inter-firm credit trading lowers overall compliance costs by about $110-140 million, and thus increases social welfare; and (3) allowing intra-firm credit transferring (but not inter-firm credit trading) reduces aggregate gasoline consumption by 0.1-0.25 Chapter 2 proposes a new approach to analyzing how automobile fuel economy is valued in the market, using a hedonic regression framework. A distinctive feature of my approach is the use of each vehicle's miles traveled: a consumer's marginal willingness to pay (MWTP) for fuel economy is inferred with her vehicle's miles traveled. With the inferred MWTP, we apply the steps of the standard hedonic method backward and estimate each vehicle's marginal and total price of fuel economy, and consumers' discount rate for future fuel cost savings. We find that the standard hedonic method may not provide a stable and reasonable estimate of the value of fuel economy, likely due to the omitted variable bias from vehicle attributes such as safety features, interior equipment and reliability. This method makes it possible to separate the portion of vehicle price that is attributable to fuel economy, and significantly alleviates the omitted variable bias. Applying the procedure to model year 2001 vehicles in the U.S. market, we estimate that consumers discount future fuel cost savings at the annual rate of 26-43$75 (in 2000 U.S. dollars), and that for the same case, the average total price of fuel economy is $1,950. We also find that larger, less fuel efficient vehicles tend to have higher marginal and total prices of fuel economy. Chapter 3 examines whether Japanese fuel economy regulations established in the 1990s induced technological progress in Japanese automakers' technology for providing fuel economy. By observing how fuel economy of automobiles has improved after controlling for changes in vehicle characteristics such as weight and power, I find that fuel economy improvement accelerated after regulations were introduced, implying induced innovation in fuel efficiency technology

Environmental Policy and Induced Technological Change : Evidence from Automobile Fuel Economy Regulations

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A Subsidy That Is Inversely Related to the Product Price

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The Effects of Making a Subsidy Inversely Related to the Product Price under Cournot Competition

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The Effect of Electricity Prices on Residential Solar PV Adoption : Fukushima as a Natural Experiment

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Retrofit and New-Build Installations of Residential Solar PV : Fukushima as a Natural Experiment

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State ownership and innovation : the relative merits of local and central state judged by innovation performance

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Investigating users' preferences for Low Emission Buses : Experiences from Europe's largest hydrogen bus fleet

The Health Economics Research Unit is funded by the Chief Scientists Office (CSO) of the Scottish Government Health and Social Care Directorate. The views expressed paper in this paper are those of the authors and not necessarily those of the CSO. Data collection for this study was funded by the Henderson Economics Research Fund. The funders had no role in study design, data collection and analysis, or preparation of the manuscript.Peer reviewedPostprin

Expression of ICAM-I on M cells covering isolated lymphoid follicles of the human colon.

To clarify the immunological function of 'M' (microfold or membranous) cells in the large intestine, we examined the expression of intercellular adhesion molecule-1 (ICAM-1) and HLA-class II antigens immunohistochemically in M cells and follicle-associated epithelia (FAE) covering isolated lymphoid follicles of the human colon in comparison with their expression in Peyer's patches of the small intestine. In Peyer's patches of the small intestine, ICAM-1 was not expressed on the epithelial cells covering the lymphoid follicles, but their cell surfaces were stained positively for HLA-DR. In contrast, colonic M cells expressed ICAM-1 on their cell surfaces but were negative for HLA class II antigens. By immunoelectron microscopy, ICAM-1 was seen to be distributed on the surface of microfolds, on the membranes of apical vesicles and on part of the basolateral plasma membranes of M cells, but was not expressed on adjacent FAE. These findings imply that the M cells in the colon and in Peyer's patches have different immunological roles. In addition, identification of ICAM-1 expression on the colonic M cells should help elucidate the pathogenesis of some inflammatory colonic diseases which appear to start in the lymphoid follicles of the colonic mucosa.</p