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The empirical effects of a gasoline tax on CO2 emissions reductions from transportation sector in Korea

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  • Kim, Young-Duk
  • Han, Hyun-Ok
  • Moon, Young-Seok

Abstract

The introduction of carbon tax is expected to mitigate GHG emissions cost-effectively. With this expectation identifying the impacts of carbon tax on energy demand and GHG emission reductions is an interesting issue. One of the basic methods of estimating these impacts is using the price elasticity. There are, however, some unanswered questions regarding the use of price elasticity. First, which elasticity estimates are appropriate to measure the impacts of carbon tax on energy demand? The existing estimates are estimated in the presence of a substitute. To assess the impact of carbon tax could we use these estimates? Second, how can we compromise the differences among the existing estimates depending on estimation methods and specifications? For example, how can we accommodate the difference in the estimates from the regional panel specification and the aggregate specification? This paper tries to answer these questions with the price elasticity of gasoline demand. With an appropriate price elasticity, we show how much gasoline consumption and GHG emissions are reduced by carbon tax for different scenarios of carbon tax rate.

Suggested Citation

  • Kim, Young-Duk & Han, Hyun-Ok & Moon, Young-Seok, 2011. "The empirical effects of a gasoline tax on CO2 emissions reductions from transportation sector in Korea," Energy Policy, Elsevier, vol. 39(2), pages 981-989, February.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:2:p:981-989
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    Cited by:

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    2. Havranek, Tomas & Irsova, Zuzana & Janda, Karel, 2012. "Demand for gasoline is more price-inelastic than commonly thought," Energy Economics, Elsevier, vol. 34(1), pages 201-207.
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    6. Koengkan, Matheus & Fuinhas, José Alberto & Kazemzadeh, Emad & Alavijeh, Nooshin Karimi & de Araujo, Saulo Jardim, 2022. "The impact of renewable energy policies on deaths from outdoor and indoor air pollution: Empirical evidence from Latin American and Caribbean countries," Energy, Elsevier, vol. 245(C).
    7. Zimmer, Anne & Koch, Nicolas, 2017. "Fuel consumption dynamics in Europe: Tax reform implications for air pollution and carbon emissions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 22-50.
    8. Webster, Allan & Ayatakshi, Sukanya, 2013. "The effect of fossil energy and other environmental taxes on profit incentives for change in an open economy: Evidence from the UK," Energy Policy, Elsevier, vol. 61(C), pages 1422-1431.
    9. Bigerna, S. & Bollino, C.A. & Micheli, S. & Polinori, P., 2017. "Revealed and stated preferences for CO2 emissions reduction: The missing link," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1213-1221.
    10. Tirkaso, Wondmagegn Tafesse & Gren, Ing-Marie, 2020. "Road fuel demand and regional effects of carbon taxes in Sweden," Energy Policy, Elsevier, vol. 144(C).

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    Keywords

    Gasoline tax CO2 emission Gasoline price elasticity;

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