Reference : On the incentives to provide fuel-efficient automobiles
Scientific journals : Article
Business & economic sciences : Microeconomics
On the incentives to provide fuel-efficient automobiles
Degryse, Hans [> >]
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)]
Journal of Economics
[en] fuel-efficient automobiles; attributes; product differentiation; D43; L15
[en] We argue that the provision of more fuel-efficient cars necessitates specific aerodynamic shapes. We show that the presence of this technological constraint may reduce the incentives to provide fuel efficiency. In equilibrium, cars become more similar and aerodynamic as fuel prices increase. However, the provided level of fuel efficiency falls short of the social optimal one such that a fuel-economy standard is welfare-enhancing.<P>(This abstract was borrowed from another version of this item.)
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