Wednesday, June 15, 2011

Pigouvian tax on gasoline

Interesting article here at 3P.

Note the importance of incentives in affecting behavioral change and the discussion of standards vs. market-based policies. I also like the discussion of the vulnerability to price shocks. Curtailing our use of gasoline is a kind of insurance against economic instability. As much as I like these arguments for raising the price of gas, we also have to recognize reasons for keeping the price of gas low (at least for some users). The U.S. is really big geographically speaking, so within country commerce may depend more critically on cheap transport than in smaller nations. Check out the linked Economist article. It's short and good.

1 comment:

Brian Graham said...

I do think that this policy that Mr. Akerson is suggesting would give some incentives for switching to more environmental friendly automobiles. Having said that however I feel that achieving this through a tax burdens economic freedom. I feel that simply finding out a way to make it cheaper for consumers to have a car of this type is the best way to achieve this as opposed to obligating people to switch the demand they want through tax. I also feel that Akerson would benefit from this more so than consumers due to the sharp increases in the prices that come with these cleaner cars. And comparing what Americans pay for gas with that of Europeans is irrelevant in my opinion.