Abstract This paper uses an innovative cost-benefit methodology to evaluate various strategies aimed at reducing automobile gasoline consumption. These strategies are the current Corporate Average Fuel Economy (CAFE) regulations and various pricing instruments including gasoline taxes and MPG based vehicle taxes. We conclude that the social costs of CAFE are substantially higher (probably on the order of $20 billion per year) than the social costs of gasoline taxes in achieving comparable oil import reductions. That is, forcing consumers to buy undesirable cars is more onerous to them than simply raising fuel prices and allowing them to make their own adjustments. Also, it is questionable whether CAFE has positive net social benefits even allowing liberal estimates of the social benefits of oil conservation. The methodological advance in this cost-benefit analysis is the use of a probability choice model of auto-purchase behavior to allow for both changes in the non-price attributes of consumer goods, and also the dispersion of preferences for these attributes among consumers.


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    Title :

    Measuring the societal impacts of automobile downsizing


    Contributors:

    Published in:

    Publication date :

    1980-01-01


    Size :

    12 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English




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