 CAFE in the city — A spatial analysis of fuel economy standardsWaldemar Marz and Frank Goetzke Journal of Environmental Economics and Management, 2022, vol. 115, issue C Abstract: We identify and examine a new effect of fuel economy (CAFE) standards on welfare through a long-run spatial expansion of the urban form (“urban adjustment effect”) caused by lower per-mile driving costs and the distortion in the vehicle market due to CAFE standards. By integrating household-level vehicle choice and the automobile market into a calibrated monocentric city model, we find that, for a carbon emission decrease of 80 percent, the long-run urban adjustment effect adds a relevant monthly welfare cost of up to 20 Dollars to the medium-run welfare cost of CAFE compliance of 128 Dollars per month (+15 percent). This welfare cost can be alleviated by about one third through the combination of CAFE with urban growth boundaries. For fuel taxes, on the other hand, the urban adjustment effect causes a welfare gain of a similar magnitude. Keywords: Fuel economy standards; Welfare cost; Fuel tax; Monocentric city (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:115:y:2022:i:c:s0095069622000729 DOI: 10.1016/j.jeem.2022.102711 Access Statistics for this article Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates More articles in Journal of Environmental Economics and Management from Elsevier |
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