US gasoline response to vehicle fuel efficiency: A contribution to the direct rebound effect

Hillard Huntington

MPRA Paper from University Library of Munich, Germany

Abstract: This study measures the response of gasoline consumption to improved vehicle fuel efficiency (miles per gallon). Although an inverse relationship exists, the percentage decline is always less than the percentage efficiency improvement. As usually measured by past researchers, the long-run response in this study is approximately 80% of the efficiency improvement. The remaining 20% is the direct rebound effect and comports well with previous estimates. However, this rebound estimate escalates to 40-50% if horsepower or vehicle size are controlled. Even larger estimates (about 70%) are possible if carmakers change both fuel efficiency and horsepower when required to meet energy efficiency standards. Larger rebound effects are also possible when VFE improvements also reduce gasoline prices, but these price reductions may also improve welfare.

Keywords: Gasoline; Energy efficiency; Technological change (search for similar items in EconPapers)
JEL-codes: O33 Q41 Q48 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-eff, nep-ene and nep-tre
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Journal Article: US gasoline response to vehicle fuel efficiency: A contribution to the direct rebound effect (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121095

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