Regulating Automobiles: The Consequences for Consumers

Abstract

Automobiles are ubiquitous. Most Americans take at least one car trip every day to get to work or school or to run household errands. The automobile has also never been safer. New technology has brought car frames that crumple to reduce the impact of a crash, airbags that cushion the blow of an accident, and cameras that show drivers what is behind the vehicle. In addition, rising standards of living have allowed consumers to purchase more safety equipment and to question the environmental impact of cars. While cleaner, safer automobiles certainly have benefits, as economists, we must ask, what do all these regulations cost the consumer? Costs arise from three sources: workplace safety regulation, environmental regulation, and consumer safety regulation. In this paper, we examine each area in turn, focusing on how the cost of regulations impacts the average automobile consumer.

Keywords: regulation, social welfare, automobiles

JEL Classification: L5, L9, K2