Do Market Shares or Technology Explain Rising New Vehicle Fuel Economy?

Abstract

By decreasing gasoline consumption, greater fuel economy could significantly reduce environmental and energy security concerns. In this paper, we show that since the year 2000, technology and market shares have contributed roughly equally to rising new vehicle fuel economy in the United States. We discuss the implications of these patterns for the safety and welfare effects of fuel economy standards.

Keywords: corporate average fuel economy standards, passenger vehicles, fuel savings, vehicle safety, greenhouse gas emissions rate standards

JEL Classification: Q4, L62