Corporate Average Fuel Economy Standards 2017-2025 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The joint proposal was made in response to President Obama's call for the two agencies to build on a national plan that would "create a fresh generation of clean vehicles." By 2025, new autos and light trucks were anticipated to attain an unparalleled average fuel market of practically 50 miles per gallon (mpg), dropping fuel expenditure by 4 billion barrels of oil and cutting greenhouse gas emissions by 2 billion metric tons of carbon dioxide over the lifetime of the new vehicles. The NHTSA called that the national plan would create advantages of $323 billion-mainly in the type of investments in fuel costs for vehicle owners leading to four times the price. This case takes an in depth look at the NHTSA's regulatory impact analysis for the 2017-2025 fuel economy regulation and examines the projected social benefits and costs of the program.

Based on NHTSA's investigation, the private advantages to vehicle owners are several times the cost, while the outside gains are more than offset by the loss in gasoline tax revenues and small. The case scenario investigates the NHTSA's explanations for the evident paradox: if there are huge net gains for vehicle owners (and for manufacturing companies who better match buyers' tastes) from vehicles with higher mpg, why can the marketplace not generate more fuel-efficient vehicles alone? Could it be perhaps inconsistencies in consumer behavior patterns, regular market failures, or mistakes in the bureau's estimates of gains or costs? Are the more traditional marketplace failures implied by the NHTSA (imperfect competition in the auto industry and limited info) valid explanations? Case Number 1973.0.

PUBLICATION DATE: December 03, 2012 PRODUCT #: HKS727-PDF-ENG

This is just an excerpt. This case is about GLOBAL BUSINESS