IDEAS home Printed from https://ideas.repec.org/a/eis/articl/207nesbit.html
   My bibliography  Save this article

Excise Taxation and Product Quality: The Gasoline Market

Author

Listed:
  • T Nesbit

Abstract

Following Barzel (1976), product quality increases in response to unit taxation but remains unchanged by ad valorem taxation.? While many tax theorists agree this argument is theoretically sound, empirical support of Barzel's theory is limited to the cigarette market.? This paper tests and confirms his theory in the gasoline market, a market in which Barzel failed to find supporting evidence in his original article.? Using a direct test and improved data, the estimates suggest that the market share of premium-grade gasoline increases in response to both unit taxation and ad valorem taxation.

Suggested Citation

  • T Nesbit, 2007. "Excise Taxation and Product Quality: The Gasoline Market," Economic Issues Journal Articles, Economic Issues, vol. 12(2), pages 1-14, September.
  • Handle: RePEc:eis:articl:207nesbit
    as

    Download full text from publisher

    File URL: http://www.economicissues.org.uk/Files/207Nesbit.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Sumner, Michael T & Ward, Robert, 1981. "Tax Changes and Cigarette Prices [An Alternative Approach to the Analysis of Taxation]," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1261-1265, December.
    2. Cowen, Tyler & Tabarrok, Alexander, 1995. "Good Grapes and Bad Lobsters: Applying the Alchian and Allen Theorem," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 253-256, April.
    3. David Paton & Donald S. Siegel & Leighton Vaughan Williams, 2002. "A Policy Response To The E--Commerce Revolution: The Case Of Betting Taxation In The UK," Economic Journal, Royal Economic Society, vol. 112(480), pages 296-314, June.
    4. Johnson, Terry R, 1978. "Additional Evidence on the Effects of Alternative Taxes on Cigarette Prices," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 325-328, April.
    5. Barzel, Yoram, 1976. "An Alternative Approach to the Analysis of Taxation," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1177-1197, December.
    6. Bertonazzi, Eric P & Maloney, Michael T & McCormick, Robert E, 1993. "Some Evidence on the Alchian and Allen Theorem: The Third Law of Demand?," Economic Inquiry, Western Economic Association International, vol. 31(3), pages 383-393, July.
    7. Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-138, February.
    8. Archibald, Robert & Gillingham, Robert, 1980. "An Analysis of the Short-Run Consumer Demand for Gasoline Using Household Survey Data," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 622-628, November.
    9. Leffler, Keith B, 1982. "Ambiguous Changes in Product Quality," American Economic Review, American Economic Association, vol. 72(5), pages 956-967, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charlotte Emlinger & Viola Lamani, 2017. "International Trade, Quality Sorting and Trade Costs: The Case of Cognac," Working Papers 2017-18, CEPII research center.
    2. Junichi Minagawa & Thorsten Upmann, 2012. "The Generalized Alchian-Allen Theorem," CESifo Working Paper Series 3969, CESifo Group Munich.
    3. Minagawa, Junichi & Upmann, Thorsten, 2013. "A note on parental time allocation," Labour Economics, Elsevier, vol. 25(C), pages 153-157.
    4. Liu, Liqun, 2011. "The Alchian-Allen theorem and the law of relative demand: The case of multiple quality-differentiable brands," Mathematical Social Sciences, Elsevier, vol. 61(1), pages 52-57, January.
    5. Minagawa, Junichi & Upmann, Thorsten, 2013. "A conditional demand approach to the Alchian–Allen effect," Economics Letters, Elsevier, vol. 120(3), pages 546-551.
    6. Minagawa, Junichi, 2012. "On Giffen-like goods," Economics Letters, Elsevier, vol. 115(2), pages 282-285.
    7. repec:oup:jeurec:v:15:y:2017:i:3:p:626-653. is not listed on IDEAS
    8. Charlotte Emlinger & Viola Lamani, 2018. "International Trade, Quality Sorting and Trade Costs: The Case of Cognac," Cahiers du GREThA 2018-05, Groupe de Recherche en Economie Théorique et Appliquée.
    9. Daniel Flores Curiel, 2016. "Subsidizing or taxing education? A note on the quality gap and government finances," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 31(2), pages 339-353.
    10. Markus Dertwinkel-Kalt & Katrin Köhler & Mirjam R. J. Lange & Tobias Wenzel, 2017. "Demand Shifts Due to Salience Effects: Experimental Evidence," Journal of the European Economic Association, European Economic Association, vol. 15(3), pages 626-653.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eis:articl:207nesbit. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dan Wheatley). General contact details of provider: http://edirc.repec.org/data/bsntuuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.