Can taxes on cars and on gasoline mimic an unavailable tax on emissions?

Don Fullerton, Sarah E. West

Research output: Contribution to journalArticlepeer-review

Abstract

An emissions tax is efficient, but measurement of every car's emissions would be inaccurate and expensive. With identical consumers, we demonstrate the same efficiency for: an emissions tax; a gas tax that depends on fuel type, engine size, and pollution control equipment (PCE); a vehicle tax that depends on mileage; or a combination of uniform tax rates on gasoline and engine size with a subsidy to PCE. With heterogeneous consumers, efficiency can be obtained by a vehicle-specific gas tax or mileage-specific vehicle tax, but not by flat rates. We characterize second-best uniform tax rates on gasoline and on car characteristics.

Original languageEnglish (US)
Pages (from-to)135-157
Number of pages23
JournalJournal of Environmental Economics and Management
Volume43
Issue number1
DOIs
StatePublished - Jan 2002
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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