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

Ian Parry (), Carolyn Fischer and Winston Harrington

Discussion Papers from Resources For the Future

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.

Keywords: fuel economy standards; oil dependency; carbon emissions; rebound effect; gasoline tax (search for similar items in EconPapers)
JEL-codes: R48 Q48 H23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-pbe
Date: 2004-12-20
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Persistent link: http://EconPapers.repec.org/RePEc:rff:dpaper:dp-04-53

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