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Salience of carbon taxes in the gasoline market

Nicholas Rivers and Brandon Schaufele ()

Journal of Environmental Economics and Management, 2015, vol. 74, issue C, 23-36

Abstract: We demonstrate that the carbon tax imposed by the Canadian province of British Columbia caused a decline in short-run gasoline demand that is significantly greater than would be expected from an equivalent increase in the market price of gasoline. That the carbon tax is more salient, or yields a larger change in demand than equivalent market price movements, is robust to a range of specifications. As a result of the large consumer response to the tax, we calculate that during its first four years, the tax reduced carbon dioxide emissions from gasoline consumption by 2.4 million tonnes.

Keywords: Carbon tax; Tax salience; Environmental pricing; Gasoline demand (search for similar items in EconPapers)
JEL-codes: H23 H29 Q41 Q58 (search for similar items in EconPapers)
Date: 2015
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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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