Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect

Kenneth Small () and Kurt Van Dender ()
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Kurt Van Dender: Department of Economics, University of California-Irvine

No 50603, Working Papers from University of California-Irvine, Department of Economics

Abstract: We estimate the rebound effect for motor vehicles, by which improved fuel efficiency causes additional travel, using a pooled cross section of US states for 1966-2001. Our model accounts for endogenous changes in fuel efficiency, distinguishes between autocorrelation and lagged effects, includes a measure of the stringency of fuel-economy standards, and allows the rebound effect to vary with income, urbanization, and the fuel cost of driving. At sample averages of variables, our simultaneous-equations estimates of the short- and long-run rebound effect are 4.5% and 22.2%. But rising real income caused it to diminish substantially over the period, aided by falling fuel prices. With variables at 1997-2001 levels, our estimates are only 2.2% and 10.7%, considerably smaller than values typically assumed for policy analysis. With income at the 1997 – 2001 level and fuel prices at the sample average, the estimates are 3.1% and 15.3%, respectively.

Keywords: Carbon dioxide; Fuel economy; Travel demand; Motor vehicle use; Rebound effect (search for similar items in EconPapers)
JEL-codes: C2 D5 Q0 R4 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2006-03
New Economics Papers: this item is included in nep-ene and nep-ure
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:irv:wpaper:050603

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