Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-Per-Mile Limits

Posted: 24 Oct 2009  

Lawrence H. Goulder

Stanford University - Department of Economics; National Bureau of Economic Research (NBER); Resources for the Future

Mark R. Jacobsen

University of California, San Diego (UCSD) - Department of Economics; Stanford University

Arthur van Benthem

University of Pennsylvania - Business & Public Policy Department

Multiple version iconThere are 2 versions of this paper

Date Written: October 20, 2009

Abstract

Fourteen U.S. states recently pledged to adopt limits on automobile greenhouse gases (GHGs) per mile in an effort to reduce GHG emissions. We show that, because of interactions between this effort and the federal CAFE standard, 70-80 percent of the emissions reductions from new cars in adopting states will be offset because of policy-induced adjustments in new car markets elsewhere and in used car markets. Interactions with the CAFE standard also compromise the state-level effort’s ability to reduce emissions through induced technological progress. These substantial emissions-offsets reflect the nesting of state-federal regulations and would likely arise under several newly-proposed state initiatives.

Keywords: environmental regulation, climate change policy, state-federal interactions; emissions leakage, CAFE standards, greenhouse gas limits, automobile emissions limits, nested regulation

JEL Classification: Q52, Q54, Q58, H77

Suggested Citation

Goulder, Lawrence H. and Jacobsen, Mark R. and van Benthem, Arthur, Unintended Consequences from Nested State & Federal Regulations: The Case of the Pavley Greenhouse-Gas-Per-Mile Limits (October 20, 2009). Available at SSRN: https://ssrn.com/abstract=1491895

Lawrence H. Goulder (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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Stanford, CA 94305-6072
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650-723-3706 (Phone)
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National Bureau of Economic Research (NBER)

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Resources for the Future

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Mark R. Jacobsen

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

Stanford University ( email )

Stanford, CA 94305
United States

Arthur Van Benthem

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States
215-898-3013 (Phone)

HOME PAGE: http://bepp.wharton.upenn.edu/profile/21174/

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