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American Economic Review: Vol. 99 No. 3 (June 2009)

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Distributional and Efficiency Impacts of Increased US Gasoline Taxes

Article Citation

Bento, Antonio M., Lawrence H. Goulder, Mark R. Jacobsen, and Roger H. von Haefen. 2009. "Distributional and Efficiency Impacts of Increased US Gasoline Taxes." American Economic Review, 99(3): 667-99.

DOI: 10.1257/aer.99.3.667

Abstract

We examine the impacts of increased US gasoline taxes in a model that links the markets for new, used, and scrapped vehicles and recognizes the considerable heterogeneity among households and cars. Household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled. We find that each cent-per-gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0.2 percent. Taking account of revenue recycling, the impact of a 25-cent gasoline tax increase on the average household is about $30 per year (2001 dollars). Distributional impacts depend importantly on how additional revenues from the tax increase are recycled. (JEL D12, H22, H25, L62, L71)

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Authors

Bento, Antonio M. (Cornell U)
Goulder, Lawrence H. (Stanford U)
Jacobsen, Mark R. (U CA, San Diego)
von Haefen, Roger H. (NC State U)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
H22: Taxation and Subsidies: Incidence
H25: Business Taxes and Subsidies including sales and value-added (VAT)
L62: Automobiles; Other Transportation Equipment
L71: Mining, Extraction, and Refining: Hydrocarbon Fuels


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