Distributional and Efficiency Impacts of Increased US Gasoline Taxes

Authors: Bento, Antonio M.; Goulder, Lawrence H.; Jacobsen, Mark R.; von Haefen, Roger H.

Source: The American Economic Review, Volume 99, Number 3, June 2009 , pp. 667-699(33)

Publisher: American Economic Association

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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.

Document Type: Research article

DOI: http://dx.doi.org/10.1257/aer.99.3.667

Publication date: 2009-06-01

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The American Economic Review is a general-interest economics journal. The journal is published quarterly and contains articles on a broad range of topics. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession.
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