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Are Passenger Vehicles Positional Goods?

Consumer Welfare Implications of More Stringent CAFE Standards

By Institute for Policy Integrity
February 10, 2012

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Filed under Climate Change and Energy Policy, Academic Articles/Working Papers

Are Passenger Vehicles Positional Goods? examines to what degree vehicles generate consumption externalities that are not currently corrected for by the market, and whether a uniform downward shift in the size of the passenger vehicle fleet will actually result in reduced consumer welfare. Also reviewed is the rationale for more stringent fuel efficiency regulations, and how fleet size might be altered by the proposed CAFE standards. Conspicuous consumption and consumer welfare are also considered.