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  3. American Economic Review
  4. December 2011
  5. Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector

Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector

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Abstract

This paper estimates the technological progress that has occurred since 1980 in the automobile industry and the trade-offs faced when choosing between fuel economy, weight, and engine power characteristics. The results suggest that if weight, horsepower, and torque were held at their 1980 levels, fuel economy could have increased by nearly 60 percent from 1980 to 2006. Once technological progress is considered, meeting the CAFE standards adopted in 2007 will require halting the trend in weight and engine power characteristics, but little more. In contrast, the standards recently announced by the new administration, while attainable, require nontrivial "downsizing." (JEL: L50, L60)

Citation

Knittel, Christopher R. 2011. "Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector." American Economic Review, 101 (7): 3368-99. DOI: 10.1257/aer.101.7.3368

Additional Materials

JEL Classification

  • L50 Regulation and Industrial Policy: General
  • L60 Industry Studies: Manufacturing: General