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How NAFTA affected U.S. vehicle emissions: Demand growth and usage patterns

Author

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  • Lian, Zeng
  • Chen, Liang
  • Tan, Hongru

Abstract

This study quantitatively assesses the impact of the North American Free Trade Agreement (NAFTA) on U.S. vehicle emissions, emphasizing consumption-driven pollution, which is often overlooked in trade-related environmental analyses. Using a Bayesian estimation approach, we analyze how NAFTA altered vehicle purchase behaviors and utilization patterns. Our findings indicate that NAFTA significantly increased U.S. vehicle emissions. This effect was primarily driven by income-induced increases in high-emission truck ownership and their expanded use. This research contributes to the literature by clarifying the environmental trade-offs of trade liberalization, providing essential insights for policymakers balancing economic gains and environmental impacts.

Suggested Citation

  • Lian, Zeng & Chen, Liang & Tan, Hongru, 2025. "How NAFTA affected U.S. vehicle emissions: Demand growth and usage patterns," Economic Modelling, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:ecmode:v:143:y:2025:i:c:s0264999324003183
    DOI: 10.1016/j.econmod.2024.106961
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    More about this item

    Keywords

    NAFTA; Trade liberalization in used vehicles; Vehicle demand; Driving mileage;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F18 - International Economics - - Trade - - - Trade and Environment
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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