Technological Change, Vehicle Characteristics, and the Opportunity Costs of Fuel Economy Standards

Thomas Klier and Joshua Linn

RFF Working Paper Series from Resources for the Future

Abstract: Many countries are tightening passenger vehicle fuel economy standards. In assessing the welfare effects of standards, the literature has not properly accounted either for their effects on the rate of technology adoption, or for improvements in vehicle characteristics in the absence of tightening standards. A dynamic model shows that accounting for both factors has ambiguous effects on estimated welfare costs. We find that recent US and European standards have affected the rate of technology adoption as well as horsepower and torque. Estimated welfare losses from reduced horsepower and torque are of similar magnitude to the welfare gains from fuel savings.

Keywords: passenger vehicles; US greenhouse gas emissions rate standards; European carbon dioxide emissions rate standards; technology adoption (search for similar items in EconPapers)
JEL-codes: L62 Q4 Q5 (search for similar items in EconPapers)
Date: 2013-12-16
New Economics Papers: this item is included in nep-ene, nep-env, nep-res and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Technological Change, Vehicle Characteristics, and the Opportunity Costs of Fuel Economy Standards (2014)
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