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Impact of Pay-at-the-Pump on Safety Through Enhanced Vehicle Fuel Efficiency

Abstract:
Pay-at-the-Pump (PATP) is a proposal for replacing the lump-sum payment of auto insurance by a system of surcharge on gasoline price. This study examines the main argument made against PATP-namely, that by stimulating the demand for fuel-efficient vehicles, PATP results in a drastic deterioration in highway safety. The study finds the evidence does not support this argument. Moreover, if as critics argue, PATP does indeed result in a substantially accelerated replacement of older vehicles with more fuel-efficient ones, the introduction of PATP may be expected to result in a substantially safer fleet of vehicles, as well.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Petroleum – Policy and Regulation; Energy Modeling – Other

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
C59 - Econometric Modeling: Other

Keywords: Traffic accidents, pay-at -the-pump (PATP), vehicle safety, insurance reform, gasoline prices, CAFÉ

DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No3-5


Published in Volume18, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.