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Salience of carbon taxes in the gasoline market

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  • Rivers, Nicholas
  • Schaufele, Brandon

Abstract

We demonstrate that the carbon tax imposed by the Canadian province of British Columbia caused a decline in short-run gasoline demand that is significantly greater than would be expected from an equivalent increase in the market price of gasoline. That the carbon tax is more salient, or yields a larger change in demand than equivalent market price movements, is robust to a range of specifications. As a result of the large consumer response to the tax, we calculate that during its first four years, the tax reduced carbon dioxide emissions from gasoline consumption by 2.4 million tonnes.

Suggested Citation

  • Rivers, Nicholas & Schaufele, Brandon, 2015. "Salience of carbon taxes in the gasoline market," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 23-36.
  • Handle: RePEc:eee:jeeman:v:74:y:2015:i:c:p:23-36
    DOI: 10.1016/j.jeem.2015.07.002
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    More about this item

    Keywords

    Carbon tax; Tax salience; Environmental pricing; Gasoline demand;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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