Corporate Average Fuel Economy Standards and the Market for New Vehicles

This article presents an overview of the economics literature on the effect of corporate average fuel economy (CAFE) standards on the new vehicle market. Since 1978, CAFE has imposed fuel economy standards for cars and light trucks sold in the U.S. market. This article reviews the history of the sta...

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Bibliographic Details
Published in:Annual review of resource economics 2011-01, Vol.3 (1), p.445-462
Main Authors: Klier, Thomas, Linn, Joshua
Format: Article
Language:English
Subjects:
Automobile industry
Automobiles
Consumer prices
Cost estimates
Economic costs
Economic models
Economic theory
Energy efficiency
Environmental Economics and Policy
Fuel economy standards
Fuel efficiency
Gasoline taxes
Hybrid cars
Light trucks
Studies
Vehicles
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Summary:This article presents an overview of the economics literature on the effect of corporate average fuel economy (CAFE) standards on the new vehicle market. Since 1978, CAFE has imposed fuel economy standards for cars and light trucks sold in the U.S. market. This article reviews the history of the standards, followed by a discussion of the major upcoming changes in implementation and stringency. It describes strategies that firms can use to meet the standards and reviews the CAFE literature as it applies to the new vehicle market. The review concludes by highlighting areas for future research in light of the upcoming changes to CAFE.
ISSN:1941-1340
1941-1359
DOI:10.1146/annurev-resource-083110-120023