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SUMMARY

The increasing share of light trucks in the USA has been characterized as an ‘arms race’ where individual purchases of light trucks for better self-protection nevertheless worsen traffic safety for society. This paper investigates the interrelation between traffic safety and vehicle choice by quantifying the effects of the arms race on vehicle demand, producer performance, and traffic safety. The analysis suggests that the accident externality of a light truck amounts to $ 2444 during vehicle lifetime and that 12% of new light trucks sold in 2006 and 204 traffic fatalities could have been attributed to the arms race. Copyright © 2010 John Wiley & Sons, Ltd.