 Are demand elasticities affected by politically determined tax levels? Simultaneous estimates of gasoline demand and priceLennart Flood, Nizamul Islam and Thomas Sterner Applied Economics Letters, 2010, vol. 17, issue 4, 325-328 Abstract: Raising the price of fossil fuels is a key component of any effective policy to deal with climate change. Just how effective such policies are is decided by the price elasticities of demand. Many papers have studied this without recognising that not only is there a demand side response: quantities are decided by the price but also there is a reverse causality: the level of consumption affects the political acceptability of the taxes which are the main component of the final price. Thus prices affect consumption and consumption levels, in turn, have an affect on taxes and thus consumer prices. This article estimates these functions simultaneously to show that there is indeed an effect on the demand elasticity. Date: 2010 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:17:y:2010:i:4:p:325-328 Ordering information: This journal article can be ordered from DOI: 10.1080/13504850701735864 Access Statistics for this article Applied Economics Letters is currently edited by Anita Phillips More articles in Applied Economics Letters from Taylor & Francis Journals |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.