Distributional and Efficiency Impacts of Increased US Gasoline Taxes

By Antonio M. Bento, L. Goulder, Mark Jacobsen, Roger H. Haefen. 2009

455 citations recorded by the source corpus.

We examine the impacts of increased U.S. gasoline taxes with a model that links the markets for new, used, and scrapped vehicles. Parameters for the household demand side of the model derive from an estimation procedure that integrates individual choices for car ownership and miles traveled. The model considers both short- and long-run impacts of policy changes, and recognizes the considerable heterogeneity among households and cars. We find that each cent-per-gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about .2 percent. Impacts on the used car market change significantly over time. 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. If revenues are recycled in equal amounts to each household, the average household in each of the bottom four income deciles experiences a welfare gain from a gasoline tax increase. On the other hand, if revenues are recycled in proportion to income, only very poor households (those in the lowest decile) and very rich households (those in the highest) stand to gain.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/44d426526475945e1aa88f287ef88d74147a5838

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Citations in the corpus

Distributional and Efficiency Impacts of Clean and Renewable Energy Standards for Electricity (2012, unknown): “See, for example, Bento et al. (2009) and Rausch et al. (2010).”
Automobile Fuel Economy Standards: Impacts, Efficiency, and Alternatives (2011, unknown): “Fuel taxes are also thought to be regressive, at least prior to the use of revenues (West 2004;West andWilliams 2004; Bento et al. 2009).”
Identifying the elasticity of driving: Evidence from a gasoline price shock in California (2014, background): “Bento et al. (2009) find that families with children and owners of trucks and sport utility vehicles are more responsive to changes in gasoline prices, but the differences are relatively minor.”
Assessing the Energy-Efficiency Gap (2017, background): “Also, see Bento et al. (2009), Greene (2010), and Helfand and Wolverton (2011) for more detailed discussions of automobile choice models and consumer valuation of fuel economy.”
Socio-technical inertia: Understanding the barriers to electric vehicles (2013, background): “There is a plethora of evidence to highlight that consumer adoption of a technology can be attributed to government incentives, at least in part (Chetty et al., 2007; Finkelstein, 2009; Sallee, 2011; Bento et al., 2009; Klier and Linn, 2010).”
Durable goods and long-run electricity demand: : Evidence from air conditioner purchase behavior (2014, background): “Dubin and McFadden (1984) and Bento et al. (2009), for example, implicitly assume that the market for durables operates as a perfect rental market, allowing consumers to costlessly change attributes of their durables each period.”
Bicycle Infrastructure and Traffic Congestion: Evidence from DC's Capital Bikeshare (2018, unknown): “Particularly, research has characterized consumer responses to changes in the price of gasoline as well as the incidence and distributional implications of taxing gasoline to curb its negative externalities (Bento et al., 2009; West and Williams III, 2005, 2007).”
The Demand for Energy-Using Assets among the World's Rising Middle Classes (2016, background): “Without credit constraints and if not purchasing, the optimal consumption of the 12 For example, Dubin and McFadden (1984) and, more recently, Bento et al. (2009), assume a perfectly competitive rental market for durables.”
Incorporating pro-environmental preferences towards green automobile technologies through a Bayesian hybrid choice model (2013, background): “Because of the environmental externalities caused by gasoline consumption, carbon pricing is increasingly considered by policy makers as a valid instrument to reduce oil dependency and as an appropriate response to deal with the problems causing global warming (Bento et al. 2009).”
Distributional effects of a carbon tax on car fuels in France (2011, background): “However, most of them utilize North-American data (e.g., Bento et al. 2005, 2009; Poterba, 1991; Røed Larsen, 2006; West, 2004).”
The Allocative Cost of Price Ceilings in the U.S. Residential Market for Natural Gas (2011, background): “…incorporates heating system–a0j specific factors such as purchase and installation costs as well as pref- 9 Examples include Bernard, Bolduc, and Belanger (1996), Goldberg (1998), West (2004), Feng, Fullerton, and Gan (2005), Mansur, Mendelsohn, and Morrison (2008), and Bento et al. (2009).”