蝌蚪网 Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Consumer Valuation of Fuel Costs and Tax Policy: Evidence from the European Car Market
蝌蚪网 Journal: Economic Policy
vol. 10,
no. 3, August 2018
(pp. 193–225)
Abstract
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.Citation
Grigolon, Laura, Mathias Reynaert, and Frank Verboven. 2018. "Consumer Valuation of Fuel Costs and Tax Policy: Evidence from the European Car Market." 蝌蚪网 Journal: Economic Policy 10 (3): 193–225. DOI: 10.1257/pol.20160078Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H31 Fiscal Policies and Behavior of Economic Agents: Household
- L62 Automobiles; Other Transportation Equipment; Related Parts and Equipment
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels