Modelling Strategic Responses to Car and Fuel Taxation
AbstractWe develop a model to analyse the interactions between actors involved in car and fuel taxation: consumers, car producers, fuel producers and the government. Heterogeneous consumers choose between two versions of a car that differ in engine type (diesel or gasoline). Car manufacturers and fuel producers maximise profits taking into account the effects of their behaviour on each other and on consumers. In both the car and the fuel market we consider the monopoly and the full competitiveness cases. For each of the four possible combinations, we calculate the Nash equilibria conditional on tax rates. These tools are used to address issues of optimal fuel taxation for a government that has environmental as well as budgetary targets. In particular, we investigate the effects of a tax policy in which car taxes fully depend on car use. © 2006 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.
Volume (Year): 40 (2006)
Issue (Month): 2 (May)
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Web page: http://www.bath.ac.uk/e-journals/jtep
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- Hennessy, Hugh & Tol, Richard S.J., 2011.
"The impact of tax reform on new car purchases in Ireland,"
Elsevier, vol. 39(11), pages 7059-7067.
- Hennessy, Hugh & Tol, Richard S. J., 2010. "The Impact of Tax Reform on New Car Purchases in Ireland," Papers WP349, Economic and Social Research Institute (ESRI).
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