42 Pages Posted: 12 Aug 2009 Last revised: 17 Sep 2009
Date Written: August 10, 2009
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.
Keywords: accident externality, automobile demand, random coefficient demand model
JEL Classification: D12, L13, L62
Suggested Citation: Suggested Citation
Li, Shanjun, Traffic Safety and Vehicle Choice: Quantifying the Effects of the 'Arms Race' on American Roads (August 10, 2009). RFF Discussion Paper No. 09-33. Available at SSRN: https://ssrn.com/abstract=1446982 or http://dx.doi.org/10.2139/ssrn.1446982