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Corporate Average Fuel Economy Standards and the Market for New Vehicles

Author

Listed:
  • Klier, Thomas
  • Linn, Joshua

    (Resources for the Future)

Abstract
This paper presents an overview of the economics literature on the effect of Corporate Average Fuel Economy (CAFE) standards on the new vehicle market. Since 1978, CAFE has imposed fuel economy standards for cars and light trucks sold in the U.S. market. This paper reviews the history of the standards, followed by a discussion of the major upcoming changes in implementation and stringency. It describes strategies that firms can use to meet the standards and reviews the CAFE literature as it applies to the new vehicle market. The paper concludes by highlighting areas for future research in light of the upcoming changes to CAFE.

Suggested Citation

  • Klier, Thomas & Linn, Joshua, 2010. "Corporate Average Fuel Economy Standards and the Market for New Vehicles," RFF Working Paper Series dp-10-68, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-10-68
    as

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    File URL: http://www.rff.org/RFF/documents/RFF-DP-10-68.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Durrmeyer, Isis & Samano, Mario, 2016. "To Rebate or Not to Rebate: Fuel Economy Standards vs. Feebates?," TSE Working Papers 16-732, Toulouse School of Economics (TSE), revised May 2017.
    2. Kim, Jinwon, 2012. "Endogenous vehicle-type choices in a monocentric city," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 749-760.
    3. Wang, Banban & Pizer, William A. & Munnings, Clayton, 2022. "Price limits in a tradable performance standard," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    4. Wu, Jingwen & Zhang, Tong & Liao, Hua, 2024. "Fuel economy standards: Regulatory loopholes and firms’ heterogeneous responses," Journal of Environmental Economics and Management, Elsevier, vol. 123(C).
    5. Ullman, Darin F., 2016. "A difficult road ahead: Fleet fuel economy, footprint-based CAFE compliance, and manufacturer incentives," Energy Economics, Elsevier, vol. 57(C), pages 94-105.
    6. Wang, Yiwei & Miao, Qing, 2021. "The impact of the corporate average fuel economy standards on technological changes in automobile fuel efficiency," Resource and Energy Economics, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    CAFE; costs; structural estimation;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • L5 - Industrial Organization - - Regulation and Industrial Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

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