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The Corner

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Re: No Free Lunch, Part 1 million



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Jim: Regarding a gas tax, I’d concede that it doesn’t reducing driving that much because demand for gasoline isn’t that elastic. But isn’t a big part of the point of a higher gas tax to influence other consumer and business decisions? Correct me if I’m wrong, but don’t people start buying more efficient cars when gas prices are high? Also, I’ve always understood part of the reason for keeping the price of gas higher than it would be otherwise is to preserve incentives for firms to invest in means to conserve or substitute for gasoline.



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