If time and effort are required to accurately ascertain the lifetime value of energy efficiency for a durable good, consumers might rationally ignore energy efficiency. This paper argues that such inattention may be rational in the market for automobiles and home appliances. To do so, it...

What is a feasible and efficient policy to regulate air pollution from vehicles? A Pigouvian tax is technologically infeasible. Most countries instead rely on exhaust standards that limit air pollution emissions per mile for new vehicles. We assess the effectiveness and efficiency of these...

Debate about the appropriate design of energy policy hinges critically on whether consumers might undervalue energy efficiency, due to myopia or some other manifestation of limited rationality. We contribute to this debate by measuring consumers' willingness to pay for fuel economy using a novel...

We review what is known about the economic efficiency of fuel taxes relative to efficiency standards aimed at mitigating environmental externalities from automobiles. We present a simplified model of car choice that allows us to emphasize the relationships between fuel economy, other car...

In this paper we establish that there are large and persistent differences in final transaction prices for identical new cars, and that demographic characteristics explain at least 20% of the observed variation. Controlling for all observable aspects of the transaction, older consumers perform...

Firms sometimes comply with externality-correcting policies by gaming the measure that determines policy. We show theoretically that such gaming can benefit consumers, even when it induces them to make mistakes, because gaming leads to lower prices by reducing costs. We use our insights to...

This paper discusses fuel economy regulations in the United States and other countries. We first describe how these programs affect the automobile market, including their impacts on fuel use and other dimensions of the vehicle fleet. We then review different methodologies for assessing the costs...

Notches --- where small changes in behavior lead to large changes in a tax or subsidy --- figure prominently in many policies, but have been rarely examined by economists. In this paper, we analyze a class of notches associated with policies aimed at improving vehicle fuel economy. We provide...

This paper discusses fuel economy regulations in the United States and other countries. We first describe how these programs affect fuel use and other dimensions of the vehicle fleet. We then review different methodologies for assessing the costs of fuel economy regulations and discuss the...