Replication data for: Consumer Valuation of Fuel Costs and Tax Policy: Evidence from the European Car Market

Principal Investigator(s): View help for Principal Investigator(s) Laura Grigolon; Mathias Reynaert; Frank Verboven

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Project Citation:

Grigolon, Laura, Reynaert, Mathias, and Verboven, Frank. Replication data for: Consumer Valuation of Fuel Costs and Tax Policy: Evidence from the European Car Market. Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-13. https://doi.org/10.3886/E114687V1

Project Description

Summary: 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.

Scope of Project

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

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Published Versions

V1 [2019-10-13]

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