April 25, 2011

Fuel Tax Incidence and Supply Conditions

by Justin Marion and Erich Muehlegger

- The incidence of taxes on consumers and producers plays a central role in evaluating energy tax policy, yet the literature testing the main predictions of the tax incidence model is sparse. In this paper, we examine the pass-through rate of state gasoline and diesel taxes to retail prices, and importantly we estimate the dependence of pass-through on factors constraining the gasoline and diesel supply chains.

Marion, J. and E. Muehlegger (2011). "Fuel Tax Incidence and Supply Conditions." NBER Working Paper No. 16863, Mar 2011.