Corporate Average Fuel Economy Standards and the Market for New Vehicles

Resources for the Future Discussion Paper No. 10-68

31 Pages Posted: 22 Jan 2011

See all articles by Thomas Klier

Thomas Klier

Federal Reserve Bank of Chicago

Joshua Linn

Resources for the Future

Date Written: December 21, 2010

Abstract

This paper presents an overview of the economics literature on the effect of Corporate Average Fuel Economy (CAFE) standards on the new vehicle market. Since 1978, CAFE has imposed fuel economy standards for cars and light trucks sold in the U.S. market. This paper reviews the history of the standards, followed by a discussion of the major upcoming changes in implementation and stringency. It describes strategies that firms can use to meet the standards and reviews the CAFE literature as it applies to the new vehicle market. The paper concludes by highlighting areas for future research in light of the upcoming changes to CAFE.

Keywords: CAFE, costs, structural estimation

Suggested Citation

Klier, Thomas and Linn, Joshua, Corporate Average Fuel Economy Standards and the Market for New Vehicles (December 21, 2010). Resources for the Future Discussion Paper No. 10-68, Available at SSRN: https://ssrn.com/abstract=1744268 or http://dx.doi.org/10.2139/ssrn.1744268

Thomas Klier

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

Joshua Linn (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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