THE DEMAND FOR VANITY (PLATES): ELASTICITIES, NET REVENUE MAXIMIZATION, AND DEADWEIGHT LOSS

Erik D. Craft

Contemporary Economic Policy, 2002, vol. 20, issue 2, 133-144

Abstract: States raise revenue and provide a service when offering to personalize license plates. To determine the revenuE‐maximizing price and the marginal deadweight loss per dollar of net revenue, one must estimate both the slope and shift factors of the demand for vanity license plates. Shift factors include the percentage of special background plates sales (price of a complement), the requirement of front and back license plates (preferences), the age distribution (population), and income. Each $1 increase in the annual cost of owning a vanity plate reduces the final percentage of all plates personalized by 0.08%. At least ten states continue to charge a price exceeding the revenuE‐maximizing level. Many other states raise funds whose marginal social cost exceeds marginal net revenue by over 100%.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1093/cep/20.2.133

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:coecpo:v:20:y:2002:i:2:p:133-144

Ordering information: This journal article can be ordered from
https://ordering.onl ... 5-7287&ref=1465-7287

Access Statistics for this article

Contemporary Economic Policy is currently edited by Brad R. Humphreys

More articles in Contemporary Economic Policy from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().