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Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity
Abstract
This paper employs an empirically estimated model to study the equilibrium effects of an increase in the US corporate average fuel economy (CAFE) standards. I identify and model heterogeneity across firms and find that the profit impacts of CAFE fall almost entirely on domestic producers. The welfare analyses consider the simultaneous household decision of vehicle and miles traveled, allowing direct comparison with a gasoline tax. Finally, I consider dynamic impacts in the used car market. I find these comprise nearly half the gross welfare cost of CAFE and fall disproportionately on low-income households. Contrary to previous results, the overall welfare costs are regressive. (JEL H24, L51, L62)
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Cited by
Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry
Aghion, P., Dechezleprêtre, A., Hémous, D., Martin, R., & Van Reenen, J. (2016) · Journal of Political Economy · doi:10.1086/684581 · Cited by 1,604
The Cost of Reducing Greenhouse Gas Emissions
Gillingham, K., & Stock, J. H. (2018) · Journal of Economic Perspectives · doi:10.1257/jep.32.4.53 · Cited by 584
Wang, Y., & Miao, Q. (2021) · Resource and Energy Economics · doi:10.1016/j.reseneeco.2020.101211 · Cited by 38
Metadata
- Authors
- Jacobsen, M. R.
- Venue
- American Economic Journal: Economic Policy
- Publisher
- American Economic Association
- Published
- 2013-05-01
- Volume
- 5
- Issue
- 2
- Pages
- 148-187
- ISSN
- 1945-7731 (ISSN-L)
- 1945-774X
- OpenAlex
- W2019395439
- Cited by
- 280
- References
- 0
- FWCI
- 7.33
- Type
- journal article
- Language
- en
- Open access
- closed
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- CoChat. (2026). Citation check: Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity. https://app.cochat.ai/papers/10.1257/pol.5.2.148
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- Jacobsen, M. R. (2013). Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity. American Economic Journal: Economic Policy. https://doi.org/10.1257/pol.5.2.148
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
