Traffic Safety and Vehicle Choice: Quantifying the Effects of the 'Arms Race' on American Roads
Cornell University - School of Applied Economics and Management
August 10, 2009
RFF Discussion Paper No. 09-33
The increasing market share of light trucks in the U.S. in recent years has been characterized as an “arms race” where individual purchase of light trucks for better self-protection in collisions nevertheless leads to worse traffic safety for the society. This paper investigates the interrelation between traffic safety and vehicle choice by quantifying the effects of the arms race on vehicle demand, producer performance, and traffic safety. The empirical analysis shows that the accident externality of a light truck amounts to $2,444 in 2006 dollars during vehicle lifetime. Counterfactual simulations suggest that about 12% of new light trucks sold in 2006 and 204 traffic fatalities could be attributed to the arms race.
Number of Pages in PDF File: 42
Keywords: accident externality, automobile demand, random coefficient demand model
JEL Classification: D12, L13, L62
Date posted: August 12, 2009 ; Last revised: September 17, 2009
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