TY  - JOUR
AU  - Doyle,Joseph J., Jr.
AU  - Samphantharak,Krislert
TI  - $2.00 Gas! Studying the Effects of a Gas Tax Moratorium
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12266
PY  - 2006
Y2  - May 2006
UR  - http://www.nber.org/papers/w12266
L1  - http://www.nber.org/papers/w12266.pdf
N1  - Author contact info:
Joseph J. Doyle, Jr.
MIT Sloan School of Management
100 Main Street, E62-515
Cambridge, MA 02142
Tel: 617/452-3761
Fax: 617/258-6855
E-Mail: jjdoyle@mit.edu

Krislert Samphantharak
IR/PS
UC, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0519
Tel: 858/534-0627
Fax: 858/534-3939
E-Mail: krislert@gmail.com
M2  - featured in NBER digest on 2006-05-29
AB  - There are surprisingly few estimates of the effect of sales taxes on retail prices, especially at the firm level. Further, along both sides of a state border, a change in one state%u2019s sales tax can shed light on the nature of competition, as a subset of firms effectively experiences a change in its marginal cost. This paper considers the suspension, and subsequent reinstatement, of the 5% gasoline sales tax in Illinois and Indiana following a temporary price spike in the spring of 2000. Earlier laws set the timing of the reinstatements, providing plausibly exogenous changes in the tax rates. Using a unique dataset of daily, gas station-level data, retail gas prices are found to drop by 3% following the suspension, and increase by 4% following the reinstatements. After linking the stations to driving distance data, some evidence suggests that the tax increases are associated with higher prices up to an hour%u2019s drive into neighboring states.
ER  -