45 Pages Posted: 3 Nov 2008
Date Written: October 2008
Exploiting a rich data set of passenger vehicle registrations in twenty U.S. metropolitan statistical areas from 1997 to 2005, we examine the effects of gasoline prices on the automotive fleet's composition. We find that high gasoline prices affect fleet fuel economy through two channels: (1) shifting new auto purchases towards more fuel-efficient vehicles, and (2) speeding the scrappage of older, less fuel-efficient used vehicles. Policy simulations based on our econometric estimates suggest that a 10% increase in gasoline prices from 2005 levels will generate a 0.22% increase in fleet fuel economy in the short run and a 2.04% increase in the long run.
Suggested Citation: Suggested Citation
Li, Shanjun and von Haefen, Roger H. and Timmins, Christopher, How Do Gasoline Prices Affect Fleet Fuel Economy? (October 2008). NBER Working Paper No. w14450. Available at SSRN: https://ssrn.com/abstract=1294125