Modeling the response of the domestic automobile industry to mandates for increased fuel economy: an industry model

Technical Report · Wed Jun 01 04:00:00 EDT 1977

OSTI ID:6347338

Stucker, J P; Burright, B K; Mooz, W E

Predicting the effects of taxes on the price/quantity response of profit-maximizing firms is a problem frequently encountered in economic analysis. This paper deals with the response of the domestic automobile industry, a multi-product industry, to mandates for increased new-car fuel economy as legislated in the Energy Policy and Conservation Act of 1975. This law requires the sales-weighted average of new-car fuel economy for each major manufacturer to increase on a prescribed schedule from 1978 through 1985. The authors explicitly model and project the full, long-run response of the domestic automobile industry to fuel-economy mandates with a simple industry model. Their approach assumes that the domestic automobile industry acts as if it were a single entity maximizing the joint profits of its members. The monopoly assumption, while clearly not doing full justice to the price leadership form of oligopoly actually existing in the domestic market, provides insights that are obscured in most other studies by the (usually implicit) assumption of purely competitive markets.

• Research Organization: RAND Corp., Santa Monica, CA (USA)
• OSTI ID: 6347338
• Report Number(s): P-5858
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290100 -- Energy Planning & Policy-- Energy Analysis & Modeling
291000* -- Energy Planning & Policy-- Conservation
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320203 -- Energy Conservation
Consumption
& Utilization-- Transportation-- Land & Roadway
AUTOMOBILE INDUSTRY
AUTOMOBILES
AUTOMOTIVE FUELS
CHARGES
COMPLIANCE
CONSUMPTION RATES
ECONOMIC ANALYSIS
ECONOMIC IMPACT
ECONOMICS
ENERGY POLICY AND CONSERVATION ACT
ENFORCEMENT
FUEL ECONOMY
FUELS
GASOLINE
INDUSTRY
LAWS
MATHEMATICAL MODELS
PETROLEUM PRODUCTS
PROFITS
RESOURCE CONSERVATION
SIMULATION
VEHICLES