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Motor Vehicle Regulations: Regulatory Cost Estimates Could Be Improved

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Report Type Reports and Testimonies
Report Date July 9, 1992
Report No. RCED-92-110
Subject
Summary:

Although federal safety, emissions, and fuel economy regulations have yielded a wealth of benefits--everything from fewer highway deaths to cleaner air--manufacturers and consumers have paid a price. Federal agencies and the auto industry estimate regulatory costs by figuring component costs and then adding in the costs of manufacturer and dealer overhead and profit (markup) to arrive at the consumer cost. Government and industry cost estimates, however, often vary substantially. For example, the National Highway Traffic Safety Administration pegged the cost of a drivers'-side air bag at $220, while industry estimated it at about $500. This report examines (1) the methods that government and industry use to estimate the cost of proposed regulations, (2) the reasons for differences between federal and industry estimates, and (3) the extent to which federal agencies coordinate and exchange information on vehicle regulations.

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