The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel Economy Standards

Koichiro Ito and James Sallee

The Review of Economics and Statistics, 2018, vol. 100, issue 2, 319-336

Abstract: We study attribute-based regulations, under which regulatory compliance of a firm, product, or individual depends on a secondary attribute that is not the intended target of the regulation. We develop a theoretical model of the welfare consequences of attribute basing, including its distortionary costs and potential benefits. We then quantify these welfare consequences using quasi-experimental evidence from weight-based fuel economy regulations.We use bunching analysis to showthat vehicle weight increased in response to regulation. We also leverage a policy change and develop a new method for analyzing double-notched policies to compare the costs and benefits of a specific attribute-based policy.

Date: 2018
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Related works:
Working Paper: The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel-Economy Standards (2015)
Working Paper: The Economics of Attribute-Based Regulation: Theory and evidence from fuel-economy standards (2014)
Working Paper: The Economics of Attribute-Based Regulation: Theory and Evidence from Fuel-Economy Standards (2014)
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