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| Author: | West, S. E. Williams, R C. |
| Title: | Optimal taxation and cross-price effects on labor supply: estimates of the optimal gas tax |
| Journal: | Journal of Public Economics
2007 : APR, VOL. 91:3-4, p. 593-617 |
| Index terms: | gas industry labour supply taxation |
| Language: | eng |
| Abstract: | The purpose of this article is to estimate parameters necessary to calculate the optimal second-best gasoline tax, most notably the cross-price elasticity between gasoline and leisure. Using household data the authors find that gasoline is a relative complement to leisure and thus that the optimal gasoline tax is significantly higher than marginal damages, the opposite of the result suggested by the bulk of the prior literature. The article claims that following this approach to estimate cross-price elasticities with leisure could strongly influence estimates of optimal rates for other important commodity or pollution taxes. |
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