Policy Watch: Corporate Average Fuel Economy Standards

Robert W. Crandall

Journal of Economic Perspectives, 1992, vol. 6, issue 2, 171-180

Abstract: Initially, the minimum corporate average fuel economy (CAFE) program was promoted as a policy to reduce U.S. vulnerability to oil shocks. In the past two years, however, concern about global warming has resulted in new political pressures to raise CAFE once again to reduce the growth in U.S. emissions of carbon dioxide, a greenhouse gas. In this paper, I do not attempt to provide a detailed critique of these two objectives. I simply take the goals as given and draw upon estimates from the empirical literature to show that CAFE is a very costly instrument for achieving them. In addition, I compare the costs of meeting the same objectives through a fuel or carbon tax.

JEL-codes: L62 Q48 (search for similar items in EconPapers)
Date: 1992
Note: DOI: 10.1257/jep.6.2.171
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Citations: View citations in EconPapers (43)

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