Felix Salmon condemns the low quality of the arguments of G.M.'s advocates:
Market Movers: GM's Weak Arguments Against Increased Fuel Economy - Portfolio.com: What wonders of disingenuousness the auto industry is capable of! Right now, the Big Three are worried about proposals to mandate that they increase the fuel economy of the vehicles they sell, and so they're wheeling out economists to say that the proposals don't make sense. But one would think they could do better than this.
The economists (Robert Crandall and Hal Singer)... my favorite part of the whole piece:
If there was fuel-saving technology out there that cost $1,000 but generated $2,500 in the discounted present value of fuel savings over the life of the vehicle, carmakers would surely voluntarily embrace that technology. The carmaker could split the net benefits (equal to the difference between the discounted fuel savings and the cost of the technology) with the car buyer such that both parties to the transaction would be better off.
No need for regulation there. With large numbers of vehicle producers and well-informed consumers, the market is so efficient, in fact, that it ensures that all such transactions will occur, generating the socially optimal level of fuel economy....
"Socially optimal" only if the price of gasoline is at its socially-optimal level--which it is not. And "socially optimal" only if people buy cars entirely because they are useful, and not at all as counters in a zero-sum East African Plains Ape status game.
Crandall and Singer really ought to know better.