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Gasoline and Diesel Tax Incidence: The 2003 Washington State Nickel Funding Package

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  • Silvia Louis

    ()

  • Taylor Christopher T.

    () (Federal Trade Commission, Bureau of Economics, 600 Pennsylvania Ave, NW, Washington, DC 20580, United States of America)

Abstract

This paper considers a previously unexamined increase in excise taxes on gasoline and diesel fuel that were part of Washington State’s Nickel Funding Package of 2003. We fail to reject full pass-through of the amount of the tax increase to retail prices in both products. We find no significant sensitivity of retail pass-through to station locations relative to state borders or to retail competitive conditions as measured by local station density. The expansion of hypermarkets in Washington State during the period was a confounding factor in estimating tax pass-through effects.

Suggested Citation

  • Silvia Louis & Taylor Christopher T., 2016. "Gasoline and Diesel Tax Incidence: The 2003 Washington State Nickel Funding Package," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1539-1562, September.
  • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:3:p:1539-1562:n:1
    as

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    References listed on IDEAS

    as
    1. Duffy-Deno, Kevin T., 1996. "Retail price asymmetries in local gasoline markets," Energy Economics, Elsevier, vol. 18(1-2), pages 81-92, April.
    2. Doyle Jr., Joseph J. & Samphantharak, Krislert, 2008. "$2.00 Gas! Studying the effects of a gas tax moratorium," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 869-884, April.
    3. Christopher T. Taylor & Daniel S. Hosken, 2007. "THE ECONOMIC EFFECTS OF THE MARATHON-ASHLAND JOINT VENTURE: THE IMPORTANCE OF INDUSTRY SUPPLY SHOCKS AND VERTICAL MARKET STRUCTURE -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 55(3), pages 419-451, September.
    4. Matthew Lewis & Michael Noel, 2011. "The Speed of Gasoline Price Response in Markets with and without Edgeworth Cycles," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 672-682, May.
    5. John M. Barron & Kelly Hunt Blanchard & John R. Umbeck, 2004. "An Economic Analysis of a Change in an Excise Tax," The Journal of Economic Education, Taylor & Francis Journals, vol. 35(2), pages 184-196, April.
    6. Barron, John M. & Umbeck, John R. & Waddell, Glen R., 2008. "Consumer and competitor reactions: Evidence from a field experiment," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 517-531, March.
    7. E. Glen Weyl & Michal Fabinger, 2013. "Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 528-583.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    tax incidence; petroleum industry; difference in difference;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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