Matchmaking between vehicle miles traveled and fuel economy: the role of gasoline prices
نویسندگان
چکیده
This paper studies a potential e ect of gasoline prices that has been overlooked in the literature. Due to heterogeneity in demand for vehicle miles traveled (VMT), when gasoline prices increase, the increased cost of operating an ine cient vehicle are greater for households that drive more. Thus, in equilibrium, after an increase in the gasoline prices there should be a stronger matching from households, based on their VMT, to the fuel economy of the cars they own. Potentially, this matching e ect could save 15% of US gasoline consumption, even with no e ect on individual VMT and no e ect on the vehicle eet. Using con dential data from the National Highway Transportation Survey, the e ect of higher gasoline prices on such assortative matching is estimated using a variety of econometric models. For all the di erent model speci cations, the matching e ect is signi cant and quite robust. This is the rst study to analyze this re-allocation or matching e ect. JEL classi cation codes: D12, L62, Q41, Q48, R41
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