A Tale of Two Tails: Commuting and the Fuel Price Response in Driving

68 Pages Posted: 12 Feb 2018

See all articles by Kenneth Gillingham

Kenneth Gillingham

Yale University

Anders Munk-Nielsen

University of Copenhagen - Department of Economics

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Date Written: January 08, 2018

Abstract

Pricing greenhouse gases is widely understood as the most efficient approach for mitigating climate change, yet distributional effects hamper political acceptance. These distributional effects are especially important in transport, the fastest growing sector for greenhouse gas emissions. Using rich data covering the entire population of vehicles and households in Denmark, this study uncovers an important feature of driving demand: two groups of much more responsive households in the lower and upper tails of the work distance distribution. We further estimate the causal effect of public transport–a critical determinant of the upper tail–and show how public transport access can both reconcile differences in fuel price elasticities between the United States and Europe, and considerably influence the distributional effects of fuel pricing.

Keywords: transportation, distributional effects, urban form, environmental taxes

JEL Classification: L900, R400, Q400, N700

Suggested Citation

Gillingham, Kenneth and Munk-Nielsen, Anders, A Tale of Two Tails: Commuting and the Fuel Price Response in Driving (January 08, 2018). CESifo Working Paper Series No. 6792. Available at SSRN: https://ssrn.com/abstract=3122449

Kenneth Gillingham (Contact Author)

Yale University ( email )

New Haven, CT 06511
United States
203-436-5465 (Phone)

HOME PAGE: http://www.yale.edu/gillingham

Anders Munk-Nielsen

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

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