Gasoline Taxes and Consumer Behavior

Gasoline taxes can be employed to correct externalities from automobile use 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 exam...

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Bibliographic Details
Published inAmerican economic journal. Economic policy Vol. 6; no. 4; pp. 302 - 342
Main Authors Li, Shanjun, Linn, Joshua, Muehlegger, Erich
Format Journal Article
LanguageEnglish
Published American Economic Association 01.11.2014
Subjects
Air pollution
Automobiles
Consumer behavior
Consumer prices
Consumers
Consumption
Consumption taxes
Crude oil prices
Economic policy
Energy consumption
Energy economics
Energy efficiency
Estimated taxes
Estimates
Externality
Fuel consumption
Gasoline
Gasoline prices
Gasoline taxes
Studies
Taxation
Taxes
Trust funds
Vehicle miles of travel
Vehicles
United States > US
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Summary:Gasoline taxes can be employed to correct externalities from automobile use 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 examine directly how gasoline taxes affect gasoline consumption as distinct from tax-inclusive retail gasoline prices. We find robust evidence that consumers respond more strongly to gasoline tax changes under a variety of model specifications. We discuss two potential reasons for our main findings as well as their implications.
ISSN:1945-7731
1945-774X
DOI:10.1257/pol.6.4.302