Economics of fuel economy standards

Journal Article · · Regulation; (United States)

OSTI ID:5851328

Henderson, D R

The corporate average fuel economy regulations (CAFE) apply to automobile manufacturers producing more than 10,000 cars a year. A company is fined on all cars it makes if it fails to meet the CAFE standard, although there are provisions for earning fuel-efficiency credits or borrowing on future performance. The economics of these regulations explain why automakers decide to produce more small cars if sales for large cars are too strong or shift station wagon production to light trucks. CAFE is calculated separately for domestic production and imports, serving as a domestic content law by forcing manufacturers to build more small cars in the US. The author examines the costs of CAFE, noting the increased danger to occupants and the loss of market choice. He concludes that CAFE is not needed if gasoline prices reflect their true costs. 3 references.

• Research Organization: Naval Postgraduate School, Monterey, CA
• OSTI ID: 5851328
• Journal Information: Regulation; (United States), Journal Name: Regulation; (United States); ISSN REGUD
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
291000 -- Energy Planning & Policy-- Conservation
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320203* -- Energy Conservation
Consumption
& Utilization-- Transportation-- Land & Roadway
AUTOMOBILES
AUTOMOTIVE INDUSTRY
ECONOMIC IMPACT
FINANCIAL INCENTIVES
FUEL ECONOMY
IMPORTS
INDUSTRY
REGULATIONS
STANDARDS
VEHICLES