A study on the effects of the CAFE standard on consumers

In this paper, we analyzed how the CAFE standard has affected improvements in the fuel economy of vehicles, as examined in other preceding studies, but in addition, we also analyzed how these standards have affected the level of consumer interest in fuel economy. Our goal was to determine what effects the government intervention has had on consumers, and whether such intervention ought to be continued. The results showed that not only has the CAFE standard had a direct and significant impact on improving fuel economy and increasing the market share of fuel-efficient vehicles, it has also boosted the development of technologies for enhancing fuel economy and raised consumer interest in fuel economy, thus indirectly contributing to overcoming market failure. The significance of this study is that we used publically available observed data and analyzed the recent impact of the CAFE standard specifically with a focus on the behavior and strategies exhibited by consumers and automakers. Another significance of this study is that it extends our purview to examine the effects that the CAFE standard has had in other countries (Korea).