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OFFSETTING BEHAVIOR EFFECTS OF THE CORPORATE AVERAGE FUEL ECONOMY STANDARDS

Authors

  • John M. Yun

    1. Yun: Economist, Federal Trade Commission, 601 Pennsylvania Ave. NW, 5th Floor, Washington, DC 20580. E-mail jyun@ftc.gov
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      I thank Paul Rubin, Robert Chirinko, Danail Levy, Joel schrag, two anonymous referees, the workshop participants at St. Lawrence University, the Environmental Protection Agency, and the U.S. Department of Agriculture's Economic Research Service for their helpful comments and suggestions. This paper does not reflect the views of the Federal Trade Commission or any individual commissioner.


Abstract

Research has concluded that regulatory attempts to improve fuel economy, such as the Corporate Average Fuel Economy (CAFE) Standards, lower the average weight of an automobile. Ceteris paribus, this reduction in weight is detrimental to the overall level of vehicle safety. However, this study attempts to explicitly measure possible behavioral responses on the part of drivers that could offset some of the loss in safety. The results indicate that CAFE, although increasing the vulnerability rate by approximately 20%, has reduced the accident rate by 26%. The net effect on the fatality rate is a decrease of approximately 6%.

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