Fuel economy standards: Regulatory loopholes and firms’ heterogeneous responses

A-Tier
Journal: Journal of Environmental Economics and Management
Year: 2024
Volume: 123
Issue: C

Authors (3)

Wu, Jingwen (not in RePEc) Zhang, Tong (not in RePEc) Liao, Hua (Beijing Institute of Technolog...)

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Fuel economy standards have been implemented worldwide to improve the fuel efficiency of vehicles for decades, while the attribute-based design provides regulatory loopholes for automakers' compliance. Based on vehicle model-level data, a bunching analysis is used to explore automakers' responses to the weight-based and stepped fuel economy standards in China. Bunching responses are found at regulatory thresholds while exhibiting significant heterogeneity across automaker types. About 10% of vehicle models and 16% of sales of local brands have excess bunching at notches, while imported and joint-venture vehicles show fewer bunching effects. The regulatory loopholes not only induce weight increase but also bias automakers' technological inputs in fuel efficiency, leading to a larger “rebound effect” in fuel consumption; however, this effect has been weakened due to automakers' heterogeneous responses. The revised linear policy since 2021 is expected to reduce automakers’ manipulation behavior.

Technical Details

RePEc Handle
repec:eee:jeeman:v:123:y:2024:i:c:s0095069623001225
Journal Field
Environment
Author Count
3
Added to Database
2026-01-25