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Price discrimination and tax incidence : Evidence from gasoline and diesel cars

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  • Verboven, F.L.

Abstract

The existing tax policies towards gasoline and diesel cars in European countries provide a unique opportunity to analyze quality-based price discrimination and implied tax incidence. We develop an econometric framework for the demand and pricing of gasoline and diesel cars. Consumers choose a gasoline or a diesel car based on their annual mileage. Manufacturers set gasoline and diesel car prices. Our empirical results show that the relative pricing of gasoline and diesel cars is consistent with price discrimination of a monopolistic type, and inconsistent with competitive models of pricing. On average, about 70 to 85 percent of the price differentials between gasoline and diesel cars can be explained by markup differences. The implied tax incidence is especially based on fuel taxes and less so on annual car taxes
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Verboven, F.L., 1998. "Price discrimination and tax incidence : Evidence from gasoline and diesel cars," Discussion Paper 1998-139, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:18c5bf91-90c3-4be3-b858-52d699dff392
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    Cited by:

    1. Degl’Innocenti, Marta & Girardone, Claudia & Torluccio, Giuseppe, 2014. "Diversification, multimarket contacts and profits in the leasing industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 231-252.

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