The Regulation of Fuel Economy and the Demand for "Light Trucks."

Paul E Godek

Journal of Law and Economics, 1997, vol. 40, issue 2, 495-509

Abstract: The Corporate Average Fuel Economy Standard mandates fleet-average miles-per-gallon minimums for passenger vehicles sold in the United States. Among other things, the standard is intended to induce consumers to substitute small cars for large cars. While the standard has reduced the average weight of cars, it has also stimulated the demand for an Increasingly popular class of vehicles known as light trucks. The substitution to light trucks has mitigated, but not eliminated, the deleterious effects of the standard on vehicle safety. The effect of the standard on car weights and light-truck sales provides an opportunity to observe a novel manifestation of Sam Peltzman's "offsetting-behavior" hypothesis. That effect and others are analyzed here in the context of the political economy of the Corporate Average Fuel Economy Standard. Copyright 1997 by the University of Chicago.

Date: 1997
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