Impacts of Long-Range Increases in the Fuel Economy (CAFE) Standard

Andrew N. Kleit

Economic Inquiry, 2004, vol. 42, issue 2, 279-294

Abstract: This work models the impact of higher CAFE standards on producer and consumer welfare, gasoline consumption, externalities from increased driving, and the emissions of traditional pollutants. In particular, a long-run 3.0 MPG increase in the CAFE standard is estimated to impose welfare losses of about $4 billion per year and save about 5.2 billion gallons of gasoline per year, for a hidden tax of $0.78 per gallon conserved. An 11-cent-per-gallon increase in the gasoline tax would save the same amount of fuel at a welfare cost of about $290 million per year, or about one-fourteenth the cost. (JEL L51, Q30) Copyright 2004, Oxford University Press.

JEL-codes: L51 Q30 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (56)

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