This paper discusses fuel economy regulations in the United States and other countries. It first describes how these programs affect fuel use and other dimensions of the vehicle fleet. It then reviews different methodologies for assessing the costs of fuel economy regulations and discusses the policy implications of the results. The report also compares the welfare effects of fuel economy standards with those of fuel taxes and assesses whether these two policies complement each other. Finally, it reviews arguments in favor of a “feebate” system, which imposes fees on inefficient vehicles and provides rebates for efficient vehicles.
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