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Greene 10 (1:13)
Topic(s): Car Culture / Efficiency
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Video Transcript

I think the market for fuel economy has two problems. First of all, as I said, it's not efficient, that is, consumers are not paying close attention to fuel economy and what it's worth to them when they purchase a vehicle. And so the market doesn't operate efficiently. This is something we see in refrigerators, it's something we see in home heating and air conditioning, it's not just in the area of fuel economy that energy efficiency is not a well-functioning market.

The other thing is that the problems we're worried about—oil dependence, greenhouse gas emissions, energy sustainability—are public problems, they are society's problems; they're not the individuals' problems and so very few people will voluntarily go pay extra money to solve society's problems. They'll do it if everybody has to do it, but to do it on their own, there are just a relatively small number of altruistic people out there who will do that. And so we have these two kinds of market failures, if you will, in the market for fuel economy and that's why we have to have policies like fuel economy standards to solve these problems.