Fuel Consumption and Gasoline Prices: The Role of Assortative Matching between Households and Automobiles

Spencer Banzhaf and M. Taha Kasim

No 22983, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Analyses of policies to reduce gasoline consumption have focused on two effects, a compositional effect on the fuel economy of the automotive fleet and a utilization effect on how much people drive. However, the literature has missed a third effect: a matching effect, in which the policy changes how high-utilization households are matched to fuel-efficient vehicles in equilibrium. We show that higher gas prices should lead to stronger assortative matching. Empirical estimates using US micro-level data are consistent with this hypothesis. We find a $1 gas tax would reduce US gas consumption by 1.5% through the matching effect alone.

JEL-codes: Q4 Q5 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-ene, nep-tre and nep-ure
Note: EEE
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Published as H. Spencer Banzhaf & M. Taha Kasim, 2018. "Fuel Consumption and Gasoline Prices: The Role of Assortative Matching between Households and Automobiles," Journal of Environmental Economics and Management, .

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Journal Article: Fuel consumption and gasoline prices: The role of assortative matching between households and automobiles (2019)
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