Abstract
Several federal benefit-cost analyses report an energy paradox among firms in competitive markets and conclude that firms would benefit from mandates to increase the use of energy-saving technologies. Such findings appear incompatible with neoclassical views that private firms in competitive markets minimize costs. The Environmental Protection Agency, for example, presumes that owners of trailers pulled by tractors belonging to others underinvest in energy-saving technologies because trailer owners incur the costs while tractor owners get the benefits. We test this hypothesis by collecting data and modeling the use of energy-saving technologies as a function of fleet size, the intensity of truck usage, and proxies for management quality. We find effects consistent with conventional models but no evidence that different ownership of tractors and trailers is associated with reduced use of energy-saving technologies on trailers. Regulators should refrain from making claims that firms underuse energy-saving technologies without first rigorously evaluating evidence for such claims.
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