The effects of fuel economy mandates and taxes on drivers: impacts by income group

by James P. Stucker

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Investigates effects of governmental policy options for conserving gasoline, and determines the pattern of effects across income groups. Cost estimating relationships for auto ownership and operation are derived for income groups based on types of cars, use patterns, length of time car owned, and age of car when purchased. Costs incurred through depreciation, maintenance, insurance, and gasoline are estimated. An economic model simulating behavior of the auto industry is used to forecast effects of federal fuel economy mandates, fuel economy taxes, and gasoline taxes. The model projects the equilibrium changes in prices, costs, sales, profits, individual and aggregate fuel economy, and government revenues when various levels of mandates and taxes are imposed in 1985. The output of the model becomes input to the user cost model to estimate impacts on different groups of drivers.

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