Elasticity of Vehicle Miles of Travel to Changes in the Price of Gasoline and the Cost of Driving in Texas

Wenzel, Tom; Fujita, K. Sydny

doi:10.2172/1430691

Cited by 2 publications

(1 citation statement)

References 16 publications

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“…The 2018 benefit-cost analysis uses a larger estimate of the rebound effect (20 percent) than the 2016 benefit-cost analysis (10 percent), despite recent evidence from the academic literature that finds smaller rebound effects. For example, West et al (2017) find a zero percent rebound effect; Langer et al (2017) estimate a rebound effect of 11 percent; Knittel and Sandler (2018) find 14.7 percent; and Wenzel and Fujita (2018) estimate a range of 7.5-15.9 percent. In the 2018 NPRM, the higher rebound effect of 20 percent leads to increased private driving benefits from the CAFE standard that are approximately equal to costs from the associated increase in accidents and pollution.…”

Section: Application To the 2018 Proposal To Roll Back Fuel-economy Standardsmentioning

confidence: 99%

Estimating the Costs and Benefits of Fuel-Economy Standards

Bento¹,

Jacobsen²,

Knittel³

et al. 2019

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The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. The authors declare that they have no relevant or material financial interests or any other conflicts of interest that relate to the research described in this paper. We thank Gloria Helfand, Matt Kotchen, Jim Stock and Catherine Wolfram as well as seminar participants at the 2019 NBER Workshop on Environmental and Energy Policy and the Economy for helpful comments and suggestions. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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Section: Application To the 2018 Proposal To Roll Back Fuel-economy Standardsmentioning

confidence: 99%

Estimating the Costs and Benefits of Fuel-Economy Standards

Bento¹,

Jacobsen²,

Knittel³

et al. 2019

View full text Add to dashboard Cite

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Estimating the Costs and Benefits of Fuel-Economy Standards

Bento¹,

Jacobsen²,

Knittel³

et al. 2020

Environmental and Energy Policy and the Economy

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Fuel-economy standards for new vehicles are a primary policy instrument in many countries to reduce the carbon footprint of the transportation sector. These standards have many channels of costs and benefit, impacting sales, composition, vehicle attributes, miles traveled and externalities in the new-car fleet, as well as the composition and size of the used fleet. We develop a tractable analytical framework to examine the welfare effects of fuel-economy standards, and apply it to the recent government proposal to roll back fuel-economy standards. We find that our combined, multi-market vehicle choice model implies that the proposal would increase the size of the vehicle fleet over time, and also generates smaller welfare gains than models with a less rich structure of the vehicle market, such as the one used in the analysis associated with the 2018 Notice of Proposed Rulemaking (NPRM) announcement. The disparities across the two models appear to result from the absence of feedback effects in the NPRM analysis. We stress the importance of instead using a multi-market vehicle choice model to provide the most accurate predictions of costs and benefits. We also derive bounds that can serve as a check on the theoretical consistency of such analyses, and that offer insights into the magnitudes of potential errors resulting from imperfect multi-market integration.

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Elasticity of Vehicle Miles of Travel to Changes in the Price of Gasoline and the Cost of Driving in Texas

Abstract: and Anna Spurlock of LBNL. Youness Bennani of LBNL provided valuable assistance in matching the EPA certification fuel economy values with the Texas vehicle data.

Cited by 2 publications

References 16 publications

Estimating the Costs and Benefits of Fuel-Economy Standards

Estimating the Costs and Benefits of Fuel-Economy Standards

Estimating the Costs and Benefits of Fuel-Economy Standards

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