This paper estimates the technological progress that has occurred since 1980 in the automobile industry and the trade-offs faced when choosing between fuel economy, weight, and engine power ...characteristics. The results suggest that if weight, horsepower, and torque were held at their 1980 levels, fuel economy could have increased by nearly 60 percent from 1980 to 2006. Once technological progress is considered, meeting the Corporate Average Fuel Economy (CAFE) standards adopted in 2007 will require halting the trend in weight and engine power characteristics, but little more. In contrast, the standards recently announced by the new administration, while attainable, require nontrivial "downsizing."
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Will We Ever Stop Using Fossil Fuels? Covert, Thomas; Greenstone, Michael; Knittel, Christopher R.
The Journal of economic perspectives,
01/2016, Volume:
30, Issue:
1
Journal Article
Peer reviewed
Open access
Scientists believe significant climate change is unavoidable without a drastic reduction in the emissions of greenhouse gases from the combustion of fossil fuels. However, few countries have ...implemented comprehensive policies that price this externality or devote serious resources to developing low-carbon energy sources. In many respects, the world is betting that we will greatly reduce the use of fossil fuels because we will run out of inexpensive fossil fuels (there will be decreases in supply) and/or technological advances will lead to the discovery of less-expensive low-carbon technologies (there will be decreases in demand). The historical record indicates that the supply of fossil fuels has consistently increased over time and that their relative price advantage over low-carbon energy sources has not declined substantially over time. Without robust efforts to correct the market failures around greenhouse gases, relying on supply and/or demand forces to limit greenhouse gas emissions is relying heavily on hope.
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We investigate whether car buyers are myopic about future fuel costs. We estimate the effect of gasoline prices on short-run equilibrium prices of cars of different fuel economies. We then compare ...the implied changes in willingness-to-pay to the associated changes in expected future gasoline costs for cars of different fuel economies in order to calculate implicit discount rates. Using different assumptions about annual mileage, survival rates, and demand elasticities, we calculate a range of implicit discount rates similar to the range of interest rates paid by car buyers who borrow. We interpret this as showing little evidence of consumer myopia.
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We estimate the stock market effects of the Tiger Woods scandal on his sponsors and sponsors' competitors. In the 10-15 trading days after the onset of the scandal, the full portfolio of sponsors ...lost more than 2% of market value, with losses concentrated among the core three sponsors: Electronic Arts, Nike, and PepsiCo (Gatorade). Sponsors' day-by-day losses correlate strongly with Google search intensity regarding the endorsement-related impact of the scandal, as well as with qualitative indicators of "endorsement-related news." At least some sponsors' losses were competitors' gains, suggesting that endorsement deals are partially a business-stealing strategy. However, competitors who were themselves celebrity endorsement intensive fared relatively worse than those who were not endorsement intensive, and that difference also correlates day by day with news/search intensity regarding the scandal. It appears that the scandal sent a negative marketwide signal about the reputation risk associated with celebrity endorsements.
This paper was accepted by Pradeep Chintagunta, marketing.
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As the world moves away from fossil fuels, there is growing recognition of the need for a just transition of those working in carbon-intensive industries and for policy to support this transition. ...While recent policies such as the U.S. Inflation Reduction Act (IRA) have begun to incorporate support for energy-intensive regions, little work has thoroughly investigated which communities are most vulnerable to economic disruption in the energy transition and therefore require policy support. This paper analyzes the distribution of employment vulnerability in the U.S. by calculating the average "employment carbon footprint" of close-to every job in the U.S. economy at high geographic and sectoral granularity. The measure considers employment vulnerability across the entire economy and captures both fossil fuel consumption and production effects, with the sectors covered in our analysis accounting for 86% of total U.S. employment and 94% of U.S. carbon emissions outside of the transportation sector. We find that existing efforts to identify at-risk communities both in the literature and the IRA exclude regions of high employment vulnerability, and thereby risk leaving these communities behind in the energy transition. This work underscores the importance of proactive and continuous measures of employment vulnerability, presents policymakers with much-needed data to incorporate such measures into just transition policy and makes the case for place-based policy approaches when considering how best to support communities through the energy transition.
We investigate the effects of automobile congestion on ambient air pollution and local infant mortality rates using data from California spanning 2002 to 2007. Constructing instrumental variables ...(IV) using the relationship of traffic, weather conditions, and pollutants, we show that particulate matter, even at modern levels, has large marginal effects on weekly infant mortality rates, especially for premature or low birthweight infants. We also find suggestive evidence of large effects for carbon monoxide, though results are imprecise. Finally, we check estimate sensitivity to nonclassical measurement error in local pollution and show that our IV results are robust to such concerns.
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We document the numerical challenges we experienced estimating random-coefficient demand models as in Berry, Levinsohn, and Pakes (1995) using two well-known data sets and a thorough optimization ...design. The optimization algorithms often converge at points where the first-and second-order optimality conditions fail. There are also cases of convergence at local optima. On convergence, the variation in the values of the parameter estimates translates into variation in the models' economic predictions. Price elasticities and changes in consumer and producer welfare following hypothetical merger exercises vary at least by a factor of 2 and up to a factor of 5.
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The United States consumes more petroleum-based liquid fuel per capita than any other OECD high-income country—30 percent more than the second-highest country (Canada) and 40 percent more than the ...third-highest (Luxembourg). The transportation sector accounts for 70 percent of U.S. oil consumption and 30 percent of U.S. greenhouse gas emissions. Taking the externalities associated with high U.S. gasoline consumption as largely given, I focus on understanding the policy tools that seek to reduce this consumption. I consider four main channels through which reductions in U.S. oil consumption might take place: 1) increased fuel economy of existing vehicles, 2) increased use of non-petroleum-based, low-carbon fuels, 3) alternatives to the internal combustion engine, and 4) reduced vehicle miles traveled. I then discuss how these policies for reducing petroleum consumption compare with the standard economics prescription for using a Pigouvian tax to deal with externalities. Taking into account that energy taxes are a political hot button in the United States, and also considering some evidence that consumers may not “correctly” value fuel economy, I offer some thoughts about the margins on which policy aimed at reducing petroleum consumption might usefully proceed.
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In a randomized audit study, we sent passengers in Boston, MA on nearly 1000 rides on controlled routes using the Uber and Lyft smartphone apps, recording key performance metrics. Passengers randomly ...selected between accounts that used African American-sounding and white-sounding names. We find that the probability an Uber driver accepts a ride, sees the name, and then cancels doubles when passengers used the account attached to the African American-sounding name. In contrast, Lyft drivers observe the name before accepting a ride and, as expected, we find no effect of name on cancellations. We do not, however, find that the increase in cancellations leads to measurably longer wait times for Uber.
•Travelers completed nearly 1000 rides on controlled routes in Boston, USA using the Uber and Lyft smartphone apps.•Travelers randomized between accounts that used African American-sounding and white-sounding names.•Uber drivers were twice as likely to cancel an accepted ride when travelers were using the African American-sounding name.•Lyft drivers, who see the name before accepting a ride, show no effect of name on cancellations after the trip is accepted.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
A matter of debate in climate policy is whether lawmakers should rely on carbon pricing or regulations, such as low-carbon standards, to reach emission reduction goals. Past research showed that ...pricing is more cost-effective. However, previous work studied the two policies when implemented separately, in effect comparing two policy extremes. In contrast, we explore the full spectrum of climate policy mixes that include both types of policies but vary in how much they rely on each. We do this both analytically by extending previous theory and numerically with two energy system models. In line with past work, increasing reliance on pricing increases the cost-effectiveness of the policy mix. However, we show that this benefit exhibits diminishing marginal returns. Thus the gain in cost-effectiveness from complementing stringent standards with modest pricing is relatively large. Our results show that relying on pricing for 20% of emission reductions (and on a standard for 80%) reduces costs by 32%–57% compared to a standard-only approach. Importantly, trading off more of the standard for pricing delivers smaller and smaller gains in cost-effectiveness. For example, a policy mix that relies on each policy for 50% of emission reductions decreases costs by 60%–81%, which is already 71%–88% as cost-effective as the theoretically most cost-effective pricing-only policy.
•The efficiency benefit of carbon pricing exhibits diminishing marginal returns.•Modest carbon pricing delivers relatively large efficiency improvements.•Partial reliance on clean energy standards entails a relatively small efficiency loss.•Policy mixes combining standards and pricing can be near-cost-optimal.•Policy mixes allow policy makers to leverage the distinct advantages of each policy.
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