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Title
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Car user taxes, quality characteristics, and fuel efficiency
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Author
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Abstract
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| We study the impact of car user taxes on vehicle quality and demand for kilometres. First, holding car prices fixed, we find that a higher fuel tax leads households to choose cars of better fuel efficiency, provided that the demand for car use is inelastic. Surprisingly, a higher kilometre tax reduces the demand for fuel efficiency. Next, we study how car prices react to the tax changes. Fuel taxes make owning very fuel-efficient cars more expensive, while reducing prices of cars of low fuel efficiency. Both fuel taxes and kilometre charges imply lower prices for large and powerful cars. |
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Language
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English
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Source (journal)
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Journal of transport economics and policy. - London, 1967, currens
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Publication
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London
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2014
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ISSN
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0022-5258
[print]
1754-5951
[online]
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Volume/pages
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48
:3
(2014)
, p. 345-366
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ISI
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000340698000001
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