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Over the past decade, tightening vehicle fuel economy standards has reduced new vehicle sales and modestly increased the standards’ short-term costs.

Like many energy efficiency standards, passenger vehicle fuel economy and greenhouse gas standards apply to new but not existing vehicles. In theory, such vintage differentiated regulation could raise demand for used vehicles, which would reduce the social welfare gains of tighter vehicle standards. Using household data from 1996 through 2016, which includes periods of stable and tightening standards, we provide the first direct evidence of the effects of standards on choices of new and used vehicles. Tighter standards induce statistically and economically significant shifts from new to used vehicle purchases, which raises welfare costs of tighter standards.