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Diesel price convergence and mineral oil taxation in Europe

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  • Axel Dreher
  • Tim Krieger

Abstract

We empirically analyze convergence of European producer and consumer prices for diesel fuel and investigate the role of excise taxation. By comparing the speed of convergence of prices and taxes we find a surprisingly fast speed of convergence for consumer prices. While this can in part be explained by fuel tourism, the main driving force is producer price dynamics. Tax convergence contributes weakly to price convergence, but the overall effect is to slow down consumer relative to producer price convergence.

Suggested Citation

  • Axel Dreher & Tim Krieger, 2007. "Diesel price convergence and mineral oil taxation in Europe," KOF Working papers 07-182, KOF Swiss Economic Institute, ETH Zurich.
  • Handle: RePEc:kof:wpskof:07-182
    DOI: 10.3929/ethz-a-005502892
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    References listed on IDEAS

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    4. Michael Gorski & Tim Krieger & Thomas Lange, 2007. "Pensions, Education and Life Expectancy," Working Papers CIE 4, Paderborn University, CIE Center for International Economics.
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    9. Michiel Evers & Ruud A. de Mooij & Herman R.J. Vollebergh, 2004. "Tax Competition under Minimum Rates: The Case of European Diesel Excises," Tinbergen Institute Discussion Papers 04-062/3, Tinbergen Institute.
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    11. Axel Dreher & Tim Krieger, 2010. "Diesel price convergence and mineral oil taxation in Europe," Applied Economics, Taylor & Francis Journals, vol. 42(15), pages 1955-1961.
    12. Banfi, Silvia & Filippini, Massimo & Hunt, Lester C., 2005. "Fuel tourism in border regions: The case of Switzerland," Energy Economics, Elsevier, vol. 27(5), pages 689-707, September.
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    16. Axel Dreher & Tim Krieger, 2008. "Do Prices for Petroleum Products Converge in a Unified Europe with Non-Harmonized Tax Rates?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 61-88.
    17. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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    Citations

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    Cited by:

    1. Tim Krieger & Thomas Lange, 2010. "Education policy and tax competition with imperfect student and labor mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(6), pages 587-606, December.
    2. Delgado, Francisco J. & Freire-González, Jaume & Presno, Maria J., 2022. "Environmental taxation in the European Union: Are there common trends?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 670-682.
    3. Balaguer, Jacint & Ripollés, Jordi, 2014. "Are the transport fuel retail markets regionally integrated in Spain? Evidence from price transmission," Economic Modelling, Elsevier, vol. 42(C), pages 323-332.
    4. Axel Dreher & Tim Krieger, 2010. "Diesel price convergence and mineral oil taxation in Europe," Applied Economics, Taylor & Francis Journals, vol. 42(15), pages 1955-1961.
    5. Simón Sosvilla-Rivero & Salvador Gil-Pareja, 2012. "Convergence in car prices among European countries," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3247-3254, September.
    6. Meyler, Aidan, 2009. "The pass through of oil prices into euro area consumer liquid fuel prices in an environment of high and volatile oil prices," Energy Economics, Elsevier, vol. 31(6), pages 867-881, November.
    7. Desiderio Romero-Jordán & Marta Jorge Garc, 2013. "The impact of fuel tourism on retailers’ diesel price in Spanish neighbouring regions," Applied Economics, Taylor & Francis Journals, vol. 45(4), pages 407-413, February.
    8. Vladimir Kossov & Elena Kossova, 2013. "International dispersion of retail diesel fuel prices and the estimation of normal price values," HSE Working papers WP BRP 27/EC/2013, National Research University Higher School of Economics.
    9. Tim Krieger & Steffen Minter, 2007. "Immigration amnesties in the southern EU member states - a challenge for the entire EU?," Working Papers CIE 6, Paderborn University, CIE Center for International Economics.
    10. Mark J. Holmes & Jesús Otero & Theodore Panagiotidis, 2022. "Convergence in retail gasoline prices: insights from Canadian cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(1), pages 207-228, February.
    11. Kossov, Vladimir & Kossova, Elena, 2013. "The normal price. The case of the retail price of diesel fuel," MPRA Paper 48667, University Library of Munich, Germany, revised 12 Oct 2013.
    12. Narayan, Seema & Narayan, Paresh Kumar, 2017. "Estimating the speed of adjustment to target levels: The case of energy prices," Energy Economics, Elsevier, vol. 62(C), pages 419-427.
    13. Santos, Georgina, 2017. "Road fuel taxes in Europe: Do they internalize road transport externalities?," Transport Policy, Elsevier, vol. 53(C), pages 120-134.

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    More about this item

    Keywords

    Price convergence; Diesel; International taxation; European integration; Panel unit roots;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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