Feebates, rebates and gas-guzzler taxes

Full Title: Feebates, rebates and gas-guzzler taxes: a study ofincentives for
increased fuel economy

Kainotes:
Has an interesting bit about consumer behaviour wrt consideration of mpg by consumers. Supposedly, the average new car buyer only considers the first three years of fuel saving in the purchase of a new vehicle. I'll look at those papers briefly and pull out any interesting tidbits for you. This paper looks at a policy that involves a mpg pivot point beyond which producers get rebates and before which they get fined. Sounds cool.

Canada connection: guess they do this "feebate" thing in Ontario.

ABSTRACT: US fuel economy standards have not been changed significantly in 20 years. Feebates are a market-based alternative in which vehicles with fuel consumption rates above a ‘‘pivot point’’ are charged fees while vehicles below receive rebates. By choice of pivot points, feebate systems can be made revenue neutral. Feebates have been analyzed before. This study re-examines feebates using recent data, assesses how the undervaluing of fuel economy by consumers might affect their efficacy, tests sensitivity to the cost of fuel economy technology and price elasticities of vehicle demand, and adds assessments of gas-guzzler taxes or rebates alone. A feebate rate of $500 per 0.01 gallon per mile (GPM) produces a 16 percent increase in fuel economy, while a $1000 per 0.01GPM results in a 29 percent increase, even ifconsumers count only the first 3 years off uel savings. Unit sales decline by about 0.5 percent but sales revenues increase because the added value off uel economy technologies outweighs the decrease in sales. In all cases, the vast majority of fuel economy increase is due to adoption of fuel economy technologies rather than shifts in sales.

AUTHORs: David L. Greene, Philip D. Patterson, Margaret Singh, Jia Li