U.S. Fuel Economy Standards: Economics and Efficiency

The U.S. corporate average fuel economy (CAFE) standards place requirements on the efficiency of new vehicles sold and are a cornerstone of U.S. efforts to reduce gasoline use. They are currently slated for a sharp increase in stringency, nearly doubling the average fuel economy of new vehicles by 2025. I will present results from a set of three projects examining the economics behind these rules: First, I measure the overall costs of CAFE policy using detailed data on demand for new vehicles and a model of producer behavior. Second, I address the intertwined questions of vehicle size and accident safety in the context of CAFE. Finally, I will present results from a current working paper that measures the effects of CAFE on used vehicle scrappage.

Speaker: Mark Jacobsen, UC San Diego