Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity

Mark R. Jacobsen

American Economic Journal: Economic Policy, 2013, vol. 5, issue 2, 148-87

Abstract: This paper employs an empirically estimated model to study the equilibrium effects of an increase in the US corporate average fuel economy (CAFE) standards. I identify and model heterogeneity across firms and find that the profit impacts of CAFE fall almost entirely on domestic producers. The welfare analyses consider the simultaneous household decision of vehicle and miles traveled, allowing direct comparison with a gasoline tax. Finally, I consider dynamic impacts in the used car market. I find these comprise nearly half the gross welfare cost of CAFE and fall disproportionately on low-income households. Contrary to previous results, the overall welfare costs are regressive. (JEL H24, L51, L62)

JEL-codes: H24 L51 L62 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/pol.5.2.148
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (117)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/pol.5.2.148 (application/pdf)
http://www.aeaweb.org/aej/pol/data/2011-0098_data.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aejpol:v:5:y:2013:i:2:p:148-87

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Journal: Economic Policy is currently edited by Matthew Shapiro

More articles in American Economic Journal: Economic Policy from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().