How Do US Passenger Vehicle Fuel Economy Standards Affect New Vehicle Purchases?
This article explains the effects of energy efficiency standards on new vehicle purchases.
Abstract
Like many energy efficiency standards, passenger vehicle fuel economy and greenhouse gas standards apply to new but not used products. In theory, such vintage differentiated regulation could reduce demand for new vehicles, which would reduce the social welfare gains of tighter standards. Using household data from 1996 to 2016, which includes periods of stable standards and periods of tightening standards, we provide the first direct evidence of the effects of standards on new vehicle purchases. Tighter standards induce statistically and economically significant reductions in new vehicle purchases, which raises welfare costs of tighter standards modestly.
