Gasoline Taxes and Consumer Behavior

DSpace/Manakin Repository

Gasoline Taxes and Consumer Behavior

Citable link to this page

 

 
Title: Gasoline Taxes and Consumer Behavior
Author: Li, Shanjun; Linn, joshua; Muehlegger, Erich J.

Note: Order does not necessarily reflect citation order of authors.

Citation: Li, Shanjun, Joshua Linn, and Erich J. Muehlegger. 2012. Gasoline Taxes and Consumer Behavior. HKS Faculty Research Working Paper Series RWP12-006, John F. Kennedy School of Government, Harvard University.
Full Text & Related Files:
Abstract: Gasoline taxes can be employed to correct externalities associated with automobile use, to reduce dependency on foreign oil, and to raise government revenue. Our understanding of the optimal gasoline tax and the efficacy of existing taxes is largely based on empirical analysis of consumer responses to gasoline price changes. In this paper, we directly examine how gasoline taxes affect consumer behavior as distinct from tax-exclusive gasoline prices. Our analysis shows that a 5-cent tax increase reduces gasoline consumption by 1.3 percent in the short-run, much larger than that from a 5-cent increase in the tax-exclusive gasoline price. This difference suggests that traditional analysis could significantly underestimate policy impacts of tax changes. We further investigate the differential effect from gasoline taxes and tax-exclusive gasoline prices on both the intensive and extensive margins of gasoline consumption. We discuss implications of our findings for the estimation of the implicit discount rate for vehicle purchases and for the fiscal benefits of raising taxes.
Published Version: http://web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=8234
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:8506866
Downloads of this work:

Show full Dublin Core record

This item appears in the following Collection(s)

 
 

Search DASH


Advanced Search
 
 

Submitters