"The European Conference of Ministers of Transport has released a report that analyzes the gap between fuel efficiency certification test ratings and the actual on-road fuel efficiency of automobiles. The report also examines technologies available that could reduce that gap and improve fuel...

To what extent do car buyers undervalue future fuel costs, and what does this imply for the effectiveness of alternative tax policies? To address both questions, we show it is crucial to account for consumer heterogeneity in mileage and other dimensions. We use detailed product-level data for a...