Perfect Competition, Urbanization, and Tax Incidence in the Retail Gasoline Market

Economic Inquiry, Vol. 47, No. 1, pp. 118-134, January 2009

17 Pages Posted: 26 Jan 2009

See all articles by James Alm

James Alm

Tulane University

Edward Sennoga

affiliation not provided to SSRN

Mark Skidmore

Michigan State University - Department of Agricultural Economics

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 Classification: H22

Suggested Citation

Alm, James and Sennoga, Edward and Skidmore, Mark L., Perfect Competition, Urbanization, and Tax Incidence in the Retail Gasoline Market. Economic Inquiry, Vol. 47, No. 1, pp. 118-134, January 2009, Available at SSRN: https://ssrn.com/abstract=1331692 or http://dx.doi.org/10.1111/j.1465-7295.2008.00164.x

James Alm (Contact Author)

Tulane University ( email )

United States
5048628344 (Phone)

Edward Sennoga

affiliation not provided to SSRN ( email )

Mark L. Skidmore

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

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