We develop a framework to study “attribute-based regulations,” under which regulatory compliance of a firm, product, or individual depends upon a secondary attribute that is not the intended target of the regulation. Many important economic policies are attribute-based, but economists have given the phenomenon little attention. Our model characterizes the welfare consequences of attribute basing, including its distortionary costs and potential benefits. We empirically test the model predictions by exploiting quasi-experiments in Japanese fuel-economy regulations, under which fuel-economy targets are declining step functions of vehicle weight. Using bunching analysis, we identify that the attribute-based fuel-economy regulation induced significant distortionary in- creases in vehicle weight. Our model also shows conditions under which attribute basing provides efficiency or distributional benefits, at the cost of distorting the attribute. We empirically quantify this welfare trade-off by developing counterfactual simulations based on incentives created by “double-notched” policies.
Areas of Focus: Energy Markets
, Energy Efficiency
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
, Fossil Fuels
Improving energy efficiency is lauded as a promising way reduce emissions and lower energy costs. Yet, a robust body of research demonstrates that not all efficiency investments deliver. EPIC faculty...
Under current policies, fossil fuels will play an important role in the energy system for the foreseeable future. EPIC research is exploring the costs and benefits of these fuels as...
, Climate Change
Mobility is central to economic activity. Yet, a lack of fuel diversity and continued demand growth have made the transportation industry a major contributor to global pollution and carbon emissions....
, Climate Economics
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
, Climate Law & Policy
Climate change will affect every sector of the economy, both locally and globally. EPIC research is quantifying these effects to help guide policymakers, businesses, and individuals working to mitigate and...
, Fuel Economy Standards
Climate Law & Policy
As countries around the world implement policies to confront climate change, EPIC research is calculating which policies will have the most impact for the least cost.
Fuel Economy Standards
Fuel economy standards are the United States’ cornerstone transportation policy aimed at reducing both oil consumption and greenhouse gas emissions. EPIC research is exploring whether these standards are structured optimally...