Hybrid electric vehicles were introduced to the United States more than 20 years ago. With electric motors and regenerative braking, hybrids offer greater fuel economy than equivalent non-hybrid models. Policymakers heralded the introduction of these technologies as a way to reduce carbon emissions, local air pollutant emissions, and dependency on imported oil. What has been less discussed, however, are the overall welfare effects of these new technologies.
In “Quantifying the Benefits of the Introduction of the Hybrid Electric Vehicle,” Manager Richard Langford and co-author Kenneth Gillingham use new vehicle registrations in California along with detailed demographic data to model demand and supply in the market for new automobiles and to estimate the economic benefits generated by the introduction of hybrid electric vehicles. Their analysis shows that all income groups benefit from the introduction of the hybrids, with roughly two-thirds of benefits stemming from hybrids' increased fuel efficiency and the remainder from the hybrid technology itself (i.e., the "green glow").
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