How Far for a Buck? Tax Differences and the Location of Retail Gasoline Activity in Southeast Chicagoland

Mark D. Manuszak and Charles Moul
Additional contact information
Mark D. Manuszak: Federal Reserve Board of Governors

The Review of Economics and Statistics, 2009, vol. 91, issue 4, 744-765

Abstract: We exploit variation in gasoline and cigarettes taxes in adjacent political jurisdictions for northern Illinois and Indiana to examine consumers' trade-off between prices and travel. We develop a model that relates activity in the retail gasoline industry around the tax borders to consumer locations. Our results indicate that the willingness of a typical Chicagoland consumer to travel an additional mile to buy gasoline corresponds to about $0.065 to $0.084 per gallon. According to our estimates, the observed area of Chicago, the jurisdiction with the highest taxes, is missing approximately 40% of the capacity that would exist were taxes equalized. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/rest.91.4.744 link to full text (application/pdf)
Access to full text is restricted to subscribers.

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:tpr:restat:v:91:y:2009:i:4:p:744-765

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().