Modeling Motion: An Economic Model of the US Passenger Vehicle Use and CO2 Emissions

Abstract

This study applies a discrete-continuous cohort model to US vehicle purchase decisions and personal travel demand to describe the environmental and economic effects of a federal carbon policy. The transportation sector is currently culpable for one third of total US CO2 emissions and the increase in these emissions is growing at a rate faster than the emissions from all US sources. One mechanism that may be capable of stabilizing or reducing CO2 emissions in the transportation sector is to place a tax on carbon-emitting motor fuel. We calculate the impact of such a policy on the transportation sector by simulating both personal travel demand and discrete vehicle choice using Matlab. We find that such a tax will reduce the consumption of fuel, demand for vehicle miles traveled, and carbon emissions. Also, as a result of the tax, market shares of more efficient cars increase.