Thursday, 13 September 2012

Incentives matter: fuel economy file

The incentive effects of fuel-economy rules can be perverse.
The incentives to carmakers can also be weird. The original standards for fuel economy in the 1970s exempted light trucks, which were a small share of the market. That decision was critical to the explosive growth of the S.U.V. In 1973, light trucks amounted to 3 percent of new vehicle sales. Today they account for half.

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