Abstract
Passenger transport has significant externalities, including carbon emissions and air pollution. Public health research has identified additional social gains from active travel, due to the health benefits of physical exercise. Per mile, these benefits greatly exceed the external costs from car use. We introduce active travel into an optimal fuel taxation model and characterize analytically the second-best optimal fuel tax. We find that accounting for active travel benefits increases the optimal fuel tax by 44% in the USA and 38% in the UK. Fuel taxes should be implemented jointly with other policies aimed at increasing the uptake of active travel.
| Original language | English |
|---|---|
| Pages (from-to) | 93-122 |
| Number of pages | 30 |
| Journal | Economica |
| Volume | 91 |
| Issue number | 361 |
| Early online date | 13 Oct 2023 |
| DOIs | |
| Publication status | Published - Jan 2024 |
Bibliographical note
Publisher Copyright:© 2023 The Authors. Economica published by John Wiley & Sons Ltd on behalf of London School of Economics and Political Science.
Funding
We thank seminar audiences in Berlin, Dublin, Osaka, Oxford, Paris, Siena, at EAERE, IIPF, LAGV, and Elizabeth Baldwin, Geir Bjertnaes, Christian Brand, Felix Creutzig, Bart DeFloor, Marc Fleurbaey, Franziska Funke, Reyer Gerlagh, Cameron Hepburn, Zarko Kalamov, Sebastian Kraus, Ian Parry, Ryan Rafaty, Gregor Schwerhoff and Jiaxin Zhao for helpful comments, and Leona Tenkhoff for research assistance. Linus Mattauch thanks the Robert Bosch Foundation for financial support. Simona Sulikova was supported by the Martin Filko and Kellogg Progress stipends.
| Funders |
|---|
| European Commission |
| Robert Bosch Stiftung |
