An Econometric Model of the Regulated Emissions for Fuel-Efficient New Vehicles

Results of recent studies suggested that because of the way the auto emissions are regulated, increasing the fuel economy of new vehicles may lead to a degradation in air quality. These results rest on the hypothesis that increasing the fuel economy of new vehicles leaves the emission rate of the of the regulated pollutants unchanged. This paper develops an econometric model of the emission rate of new vehicles and uses the model to test the null hypothesis that increased fuel economy leaves the emission rate unchanged. The estimation results do not reject the null. We subject the model to extensive specification tests as well, to be reasonably confident of its adequacy.