Tradable Fuel Economy Credits: Competition and Oligopoly
- ORNL
Corporateaveragefueleconomy(CAFE)regulationsspecifyminimumstandardsforfuel efficiencythatvehiclemanufacturersmustmeetindependently.Wedesignasystemof tradeable fueleconomycreditsthatallowstradingacrossvehicleclassesand manufacturerswithandwithoutconsideringmarketpowerinthecreditmarket.We performnumericalsimulationstomeasurethepotentialcostsavingsfrommovingfrom the currentCAFEsystemtoonewithstricterstandards,butthatallowsvehicle manufacturersvariouslevelsofincreasedflexibility.Wefindthattheabilityforeach manufacturertoaveragecreditsbetweenitscarsandtrucksprovidesalargepercentage of thepotentialsavings.Asexpected,thegreatestsavingscomefromthegreatest flexibilityinthecreditsystem.Marketpowerlowersthepotentialcostsavingstothe industryasawhole,butonlymodestly.Lossinefficiencyfrommarketpowerdoesnot eliminatethegainsfromcredittrading.
- Research Organization:
- Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE)
- DOE Contract Number:
- DE-AC05-00OR22725
- OSTI ID:
- 964337
- Journal Information:
- Journal of Environmental Economics and Management, Journal Name: Journal of Environmental Economics and Management; ISSN 0095-0696
- Country of Publication:
- United States
- Language:
- English
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