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Fuel taxes and tolls in cost-benefit analysis

Author

Listed:
  • Pedro Godinho

    () (Faculty of Economics of the University of Coimbra and GEMF)

  • Joana Dias

    () (Faculty of Economics of the University of Coimbra and INESC Coimbra)

Abstract

When a project either generates or suppresses traffic, fuel taxes and tolls should be considered in the cost-benefit analysis. In this paper we present a simple partial equilibrium model showing that under linear demand, if factor costs are the unit of account and transfer payments are netted out at the outset, then the usual rule of the half works correctly for the incorporation of tolls in the calculus of social costs and benefits, but the incorporation of fuel taxes and other indirect taxes may require a corrective term.

Suggested Citation

  • Pedro Godinho & Joana Dias, 2011. "Fuel taxes and tolls in cost-benefit analysis," Economics Bulletin, AccessEcon, vol. 31(2), pages 1372-1378.
  • Handle: RePEc:ebl:ecbull:eb-11-00149
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    More about this item

    Keywords

    Cost-benefit analysis; Transport infrastructures; Indirect taxes;
    All these keywords.

    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • D6 - Microeconomics - - Welfare Economics

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