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Car Notches: Strategic Automaker Responses to Fuel Economy Policy / James M. Sallee, Joel Slemrod.
- Format:
- Book
- Author/Creator:
- Sallee, James M.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16604.
- NBER working paper series no. w16604
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Car Notches
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- 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 several pieces of evidence showing that automakers respond to notches in fuel economy policy by precisely manipulating fuel economy ratings so as to just qualify for more favorable treatment. We then describe the welfare consequences of this behavior and derive a welfare summary statistic applicable to many contexts.
- Notes:
- Print version record
- December 2010.
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