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Gasoline Taxes and Consumer Behavior

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  • Shanjun Li
  • Joshua Linn
  • Erich Muehlegger

Abstract

Gasoline taxes can be employed to correct externalities from automobile use and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect gasoline consumption as distinct from tax-inclusive retail gasoline prices. We find robust evidence that consumers respond more strongly to gasoline tax changes under a variety of model specifications. We discuss two potential reasons for our main findings as well as their implications.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17891.

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Date of creation: Mar 2012
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Publication status: published as Gasoline Taxes and Consumer Behavior (with Shanjun Li and Erich Muehlegger). American Economic Journal: Economic Policy, forthcoming.
Handle: RePEc:nbr:nberwo:17891

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. About the strange response of consumers to gas tax increases
    by Economic Logician in Economic Logic on 2012-03-22 15:12:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Nicholas Rivers & Brandon Schaufele, 2012. "Carbon Tax Salience and Gasoline Demand," Working Papers 1211E, University of Ottawa, Department of Economics.
  2. Timothy Welch & Sabyasachee Mishra, 2014. "Envisioning an emission diet: application of travel demand mechanisms to facilitate policy decision making," Transportation, Springer, vol. 41(3), pages 611-631, May.
  3. Marius Ley & Tobias Stucki & Martin W├Ârter, 2013. "The Impact of Energy Prices on Green Innovation," KOF Working papers 13-340, KOF Swiss Economic Institute, ETH Zurich.
  4. Linn, Joshua, 2014. "Explaining the Adoption of Diesel Fuel Passenger Cars in Europe," Discussion Papers dp-14-08, Resources For the Future.
  5. Thomas Klier & Joshua Linn, 2011. "Fuel Prices and New Vehicle Fuel Economy in Europe," Working Papers 1117, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  6. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
  7. Linn, Joshua, 2013. "The Rebound Effect for Passenger Vehicles," Discussion Papers dp-13-19-rev, Resources For the Future.
  8. Scott, K. Rebecca, 2013. "Demand and Price Uncertainty: Rational Habits in International Gasoline Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt25q4w08n, Department of Agricultural & Resource Economics, UC Berkeley.
  9. Maksim Belenkiy & Stefan Osborne, 2012. "The Effect of Changes in World Crude Oil Prices on U.S. Automobile Exports," International Journal of Energy Economics and Policy, Econjournals, vol. 2(3), pages 147-158.
  10. Baranzini, Andrea & Weber, Sylvain, 2013. "Elasticities of gasoline demand in Switzerland," Energy Policy, Elsevier, vol. 63(C), pages 674-680.

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