Uses methodology documented in N-1005 to analyze welfare costs of federal tax/subsidy programs for promoting new car fuel economy. Also describes sensitivity analyses applicable to both mandates and tax/subsidy programs, and an investigation of models for competitive as well as the joint-profit-maximizing domestic auto industry. Tax/subsidy programs could induce the same effects, at similar costs, as the currently legislated mandate program. Each program is tricky; there would be no additional benefits, and costs would increase, perhaps substantially, if taxes and subsidies were implemented in addition to the current mandate program.
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