Three Essays on The Economic Impact of Fuel Economy Policies

Abstract

To reduce local air pollution and greenhouse gas emissions from the transportation sector, governments in the U.S. and elsewhere have introduced various policy instruments including taxes, subsidies, and technology standards to reduce oil consumption from passenger transport. My dissertation aims to empirically evaluate the cost-effectiveness of certain programs that intend to increase the fleet fuel economy including consumer subsidies for adopting alternative fuel vehicles (AVFs) and the Corporate Average Fuel Economy (CAFE) Standards imposed on manufacturers. The dissertation is comprised of three chapters. Chapter 1 studies the impact of income tax credit for electric vehicle (EV) purchases and compare its cost-effectiveness with an alternative policy that subsidies charging stations when indirect network effects exist in the market. Chapter 2 estimates consumer vehicle demand using random coefficient discrete choice model and examines the substitution pattern of EVs with other fuel types, which helps assessing the environmental benefits of policies that subsidize EVs. Chapter 3 investigates the differential treatment between light trucks and passenger cars in CAFE standards and estimates to what extent does the standard split undermine the policy goal of increasing the average fleet fuel economy while achieving the redistributional goals.