The Economics of Fuel Economy Standards versus Feebates
نویسنده
چکیده
Fuel economy standards are the workhorse of U.S. policy to reduce emissions and oil use by the light duty fleet, and are slated to be dramatically tightened over the next decade. This paper elucidates the relationship between fuel economy standards and “feebate” policies that penalize low fuel economy vehicles with a fee and reward high fuel economy vehicles with a rebate. The analytical results show how a feebate can be designed to exactly match a fuel economy standard, both under the previous regulation and the current regulation. Moreover, I prove how the current footprint-based standard leads to a perverse incentive to upsize vehicles, and how this could carry over to a “footprint-based feebate.” To more concretely show the effects of both policies, I use the National Energy Modeling System modified for this study (NEMS-NEPI) to simulate the current fuel economy standards and an equivalently stringent feebate policy. Both policies are found to have broadly similar effects, although the implementation of these policies in NEMSNEPI leads to minor differences in the uptake of different vehicle technologies. This paper highlights the importance of the policy details in the final welfare implications of both fuel economy standards and feebates. For reasons of policy transparency, complementary policies, and administrative costs, one could make a reasonable case for preferring feebates over fuel economy standards, but the final verdict depends on the particular standard and feebate policy implemented.
منابع مشابه
Essays on the Economics of Automobile Fuel Economy
Title of dissertation: ESSAYS ON THE ECONOMICS OF AUTOMOBILE FUEL ECONOMY Takahiko Kiso, Doctor of Philosophy, 2013 Dissertation directed by: Professor Kenneth McConnell Department of Agricultural and Resource Economics This dissertation consists of three chapters that analyze issues relating to automobile fuel economy. Chapter 1 discusses automobile fuel economy regulations in the United State...
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