A study is presented of the rates of penetration of different transport technologies under policy constraints on CO, emissions. The response of this sector is analyzed within an overall national level of restriction, with a focus on automobiles, light trucks, and heavy freight trucks. Using the US as an example, a linked set of three models is used to carry out the analysis: a multi-sector computable general equilibrium model of the economy, a MARKAL-type model of vehicle and fuel supply technology, and a model simulating the split of personal and freight transport among modes. Results highlight the importance of incremental improvements in conventional internal combustion engine technology, and, in the absence of policies to overcome observed consumer discount rates, the very long time horizons before radical alternatives like the internal combustion engine hybrid drive train vehicle are likely to take substantial market share. (c) 2004 Elsevier Ltd. All rights reserved.