Archives

2016 Archives

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Papers

EXPLORING FACTORS AFFECTING COMPLIANCE OF CAFE AND GHG STANDARDS: A CONSUMER CHOICE BASED ANALYSIS
Fei Xie and Zhenhong Lin:
This study explored factors that affects the compliance ability of the car industry with both CAFE and GHG standards with a time framework spanning over two phases of the National Program (phase I: 2012 ~ 2016 and phase II: 2017 ~ 2025). To evaluate the compliance, we considered a consumer choice based simulation approach to estimate the market acceptance of fuel efficiency (FE) technologies and alternative fuel vehicle (AFV) technologies in new vehicle sales for the entire national light-duty vehicle fleet. This simulation work was conducted using the Department of Energy’s Market Acceptance of Advanced Automotive Technologies (MA3T) model, a consumer choice based market simulation tool. The results showed both standards can be met even under conservative scenarios where AFVs are excluded AND the projected FE costs are high (based on the NRC high-cost projection). The compliance robustness is encouraging, but we also found two significant risk factors –low oil price and consumers’ undervaluation of fuel economy. We also quantify the benefits of AFVs in helping the car industry in complying with the entire National Program, and found the AFV contribution increases over time to a significant level at +1.1 MPGGE, -4.7 gCO2/mile and 10% extra technology cost tolerance on top of the NRC high-cost estimate.
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HIGH FREQUENCY EVIDENCE ON THE DEMAND FOR GASOLINE
Laurence Levin, Matthew S. Lewis, Frank A. Wolak:
Daily city-level expenditures and prices are used to estimate the price responsiveness of gasoline demand in the U.S. Using a frequency of purchase model that explicitly acknowledges the distinction between gasoline demand and gasoline expenditures, we consistently find the price elasticity of demand to be an order of magnitude larger than estimates from recent studies using more aggregated data. We demonstrate directly that higher levels of spatial and temporal aggregation generate increasingly inelastic demand estimates, and then perform a decomposition to examine the relative importance of several different sources of bias likely to arise in more aggregated studies.
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GASOLINE PRICE UNCERTAINTY AND THE DESIGN OF FUEL ECONOMY STANDARDS
Ryan Kellogg:
How should a fuel economy standard be set in the presence of substantial gasoline price uncertainty? I show that this problem has a strong parallel to Weitzman’s (1974) classic model of using price or quantity controls to regulate an externality. Changes in fuel prices act as shocks to the marginal cost of complying with the standard. Assuming constant marginal damages from fuel consumption, an application of Weitzman (1974) implies that a fixed fuel economy standard reduces expected welfare relative to a “price” policy such as a feebate or, equivalently, a fuel economy standard that is indexed to the price of gasoline. When the regulator is constrained to use a fixed standard, I show that the usual approach to setting the standard – equate expected marginal compliance cost to marginal damage – is likely to be sub-optimal because the standard may not bind if gasoline prices substantially increase. Instead, the optimal fixed standard will be relatively relaxed and may be non-binding even at the expected gasoline price. Finally, I show that although an attribute-based standard allows vehicle choices to flexibly respond to gasoline price shocks, the resulting distortions imply that the optimal fuel economy standard is not attribute-based.
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INNOVATION, EMISSIONS POLICY, AND COMPETITIVE ADVANTAGE IN THE DIFFUSION OF EUROPEAN DIESEL AUTOMOBILES
Eugenio Miravete, Maria J. Moral, Jeff Thurk:
Import tariffs have decreased significantly over the past 30 years due to a large number of economic integration agreements. We investigate whether national policies, such as environmental regulations, can be an effective replacement to protect domestic industry. Our focus is the European automobile market where diesel vehicles are dominant and emissions policy favors these vehicles. We estimate a discrete choice, oligopoly model of horizontally differentiated products using changes in observed product characteristics to identify the underlying demand and cost parameters while allowing for correlation between observed and unobserved (to the researcher) product characteristics. We find diesels were an important competitive advantage for European automakers over foreign imports during our sample. Further, EU emissions policy favored diesels and amounted to a significant non-tariff trade policy equivalent to a 13-16% import tariff. Imposing product characteristic exogeneity in the estimation leads the researcher to over-state these effects.
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Presentations

Videos

MARK BARTEAU: WELCOME

LAWRENCE LEVIN: HIGH FREQUENCY EVIDENCE ON THE DEMAND FOR GASOLINE

DAVID RAPSON: THE HOUSEHOLD VEHICLE PORTFOLIO – IMPLICATIONS FOR EMISSIONS ABATEMENT POLICIES

STEVEN PULLER: DISCUSSANT

JIM KLIESCH: DISCUSSANT

PANEL DISCUSSION

RYAN KELLOGG: GASOLINE PRICE UNCERTAINTY AND THE DESIGN OF FUEL ECONOMY STANDARDS

SOREN ANDERSON: OVERLAPPING STRATEGIES FOR REDUCING CARBON EMISSIONS

IAN PARRY: DISCUSSANT

EMILY WIMBERGER: DISCUSSANT

PANEL DISCUSSION

ZHENHONG LIN: EXPLORING FACTORS AFFECTING COMPLIANCE OF CAFE AND GHG STANDARDS

EUGENIO MIRAVETE: INNOVATION, EMISSIONS POLICY, AND COMPETITIVE ADVANTAGE

RYAN KEEFE: DISCUSSANT

ASHLEY LANGER: DISCUSSANT

PANEL DISCUSSION

POLICY PANEL: THE DECADES BEYOND – PROSPECTS FOR TRANSPORTATION SECTOR GHG MITIGATION POST-2025

Photos

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