The objective of this proposal is to determine the effect of various environmental policy designs applied to the automobile industry on pollution reductions, using actual on-the-road fuel consumption data. Many countries institute a variety of policy instruments to regulate vehicular emissions with the aims of protecting the environment and human health. There is, however, little empirical evidence to date as to the efficacy of environmental policies in regulating mobile sources using real-world fuel consumption data. Such research is often extremely difficult and hindered by a dearth of credible research designs using specific detailed data that accurately reflect fuel consumption actually achieved on the road. My study has three specific aims: Aim 1: Determine the effect of eco-car tax incentives in Japan. The eco-car tax incentives represent financial incentives to vehicle owners to purchase fuel-efficient vehicles. 1a) I will analyze the effect of these financial incentives on demand for fuel-economical vehicles and estimate pollution reductions achieved based on the official fuel efficiency figures. 1b) I will examine whether these incentives give rise to the fuel efficiency gap, the disparity between official fuel efficiency and what is actually achieved on the road. My findings will offer first evidence of the extent of the distorted fuel efficiency figures and the underlying incentives for their manipulation. Aim 2: Determine the effect of fuel prices on on-road fuel consumption in Japan. I will exploit daily variations in fuel prices and real-world fuel consumption rates by using extensive high-frequency fuel consumption data from vehicles on the road. My findings will present important policy implications for the effect of fuel taxes on fuel consumption. Aim 3: Determine the effect of fuel efficiency standards on the fuel efficiency gap in the United States (US). I will exploit temporal variations in the stringency of the Corporate Average Fuel Economy standards and use on-road fuel consumption data reported by approximately 75,000 drivers to the US Environmental Protection Agency. The proposed research is policy relevant because it will add significantly to the body of knowledge on the policy debate over the efficacy of environmental regulations on the automobile industry by providing rigorous scientific evidence using innovative quantitative methods and cutting-edge research designs, and by enabling policymakers to assess the benefits and costs of the three major designs of environmental policies in the automobile industry: tax incentives, fuel taxation, and fuel efficiency standards. The research is also contemporary because compliance with environmental policies regarding fuel efficiency on the part of the automobile industry has recently garnered unprecedented attentions after several automakers have admitted to falsifying fuel efficiency or emission data. Further, this research is comparative and transnational: comparing policy impacts between Japan and the US will highlight important similarities and differences in the two systems and infer optimal policy designs for the regulation of the automobile industry. The proposed work is relevant to the Abe Fellowship program agenda because the automobile industry plays a major role in efforts to curb climate change in the coming decades.