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A few logical assumptions can be made from the purchase of large sport utility vehicle the consumer that purchased the SUV is safer more satisfied than a consumer that purchased a smaller vehicle and is better off than having not purchasing one at all Drivers of large sport utility vehicles consequently create two negative externalities on the public The first drivers of large SUVs place a cost on public welfare by emitting harmful carbon dioxide CO2 pollution that damages the environment The second drivers of smaller automobiles experience a negative externality when drivers of large SUVs encroach on their overall safety The decreased safety of drivers of smaller automobiles is exacerbated when they are involved in an accident with a driver of a large SUV as the former is more likely to deadly injury than the latter Kockelman 2002 The combination of increased pollution and decreased driver safety in smaller vehicles fits the definition of a negative externality as the public costs of the SUV purchased are not fully reflected in the price of the vehicle Economist 2012 RuleCongress has taken repetitive action to address the negative externalities of pollution created by automobiles The first came in 1975 with the enactment of the Corporate Average Fuel Economy CAFE the second in 1978 with the Gas Guzzler Tax as part of the Energy Tax Act and most recently the Green Vehicle Guide published annually since 2000 CAFE required corporate vehicle manufacturers to produce average fuel economy for cars and trucks weighing less than 8500 pounds The Gas Guzzler Tax addressed personal vehicles that do not meet the minimum miles per gallon standard Both the CAFE and the Gas Guzzler Tax improve fuel economy standards set by the Environmental Protection Agency by sanctioning violators At the time of enactment however large SUVs were not as common as in modern driving conditions
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