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Perfect Competition, Urbanization, And Tax Incidence In The Retail Gasoline Market

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  • JAMES ALM
  • EDWARD SENNOGA
  • MARK SKIDMORE

Abstract

We use monthly gasoline price data for all 50 U.S. states over the period 1984–1999 to examine the incidence of state gasoline excise taxes. Our estimation results indicate full shifting of gasoline taxes to the final consumer. In addition, although we find that gasoline retail prices demonstrate asymmetric responses to changes in gasoline wholesale prices, we find only limited evidence of such behavior for retail prices with respect to gasoline excise taxes. Finally, we find that gasoline markets in urban states exhibit full shifting, but those in rural states (with less competition) demonstrate somewhat less than full shifting. (JEL H22)

Suggested Citation

  • James Alm & Edward Sennoga & Mark Skidmore, 2009. "Perfect Competition, Urbanization, And Tax Incidence In The Retail Gasoline Market," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 118-134, January.
    • Handle: RePEc:bla:ecinqu:v:47:y:2009:i:1:p:118-134
    DOI: 10.1111/j.1465-7295.2008.00164.x
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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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