The impact of fuel tourism on retailers’ diesel price in Spanish neighbouring regions

Authors: Romero-Jordán, Desiderio1; García-Inés, Marta Jorge2; García, Santiago Álvarez3

Source: Applied Economics, Volume 45, Number 4, 1 February 2013 , pp. 407-413(7)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

Since 1986, car fuel consumption in Spain has been subject to the Special Hydrocarbons Tax and the Value Added Tax. In addition, since 2002 regional governments have been able to apply a regional excise duty on hydrocarbons. This article analyses the impact that such a regional tax has on the retailer's diesel price at the border of the province of Lugo (in the region of Galicia) and the province of Leon (in the region of Castile Leon) (only the former region has the regional tax). Evidence shows that variations in the price of diesel at the border of Lugo are of the same sign but of lower intensity than at the border of Leon (the price–price elasticity is 0.8060). These results suggest that service stations located in regions with higher excise duties use their price policy to lessen the negative effects generated for fuel tourism.

Keywords: H24; H32; excise duty; fuel tourism diesel; prices

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036846.2011.605757

Affiliations: 1: Department of Applied Economics II,Universidad Rey Juan Carlos, Madrid, Spain 2: Department of Economics and Statistics,Universidad de León, León, Spain 3: Department of Economics,Universidad de Oviedo, Oviedo, Spain

Publication date: February 1, 2013

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