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How Do Gasoline Prices Affect Fleet Fuel Economy?

45 Pages Posted: 3 Nov 2008  

Shanjun Li

Cornell University - School of Applied Economics and Management

Roger H. von Haefen

North Carolina State University - Department of Agricultural & Resource Economics

Christopher Timmins

Duke University - Department of Economics

Date Written: October 2008

Abstract

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

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

Shanjun Li

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Roger H. Von Haefen

North Carolina State University - Department of Agricultural & Resource Economics ( email )

Box 8109
3332 Nelson Hall
Raleigh, NC 27695-8109
United States
(919) 515-8946 (Phone)
(919) 515-1824 (Fax)

HOME PAGE: http://www.ag-econ.ncsu.edu/faculty/vonHaefen/vita.pdf

Christopher D. Timmins (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1809 (Phone)
919-684-8974 (Fax)

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