Journal
AMERICAN ECONOMIC JOURNAL-ECONOMIC POLICY
Volume 10, Issue 3, Pages 193-225Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/pol.20160078
Keywords
-
Categories
Funding
- Science Foundation Flanders (FWO)
- KU Leuven Research Council (Program Financing grant)
- SSHRC (Insight Development Grant)
Ask authors/readers for more resources
To what extent do car buyers undervalue future fuel costs, and what does this imply for tax policy? To address both questions, we show it is crucial to account for consumer mileage heterogeneity. We use product-level data for a panel of European countries and exploit fuel cost variation by engine. Despite a modest undervaluation of fuel costs, fuel taxes are more effective in reducing fuel usage than product taxes. They also perform better in terms of welfare, even when usage demand is held fixed. The reason is that fuel taxes better target high mileage consumers to purchase fuel efficient cars. (JEL D12, H25, H31, L62, L71)
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available