Corporate Average Fuel Economy (CAFE) standards stipulate the average fuel efficiency (miles per gallon) of cars produced

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Corporate Average Fuel Economy (CAFE) standards stipulate the average fuel efficiency (miles per gallon) of cars produced by each manufacturer. That is, the average fuel efficiency of cars sold by GM, Ford, Chrysler, Toyota, and so forth must be at least equal to the standard set by the government. Explain why such a system introduces both in efficiencies and inequities among different automobile manufacturers.

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Economics Of The Public Sector

ISBN: 9780393925227

4th Edition

Authors: Joseph E. Stiglitz, Jay K. Rosengard

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