Who Pays the Piper?Assessing the Incidence for Pass-through of Environmental Taxes Within the Maritime Shipping Industry
Considering the importance of being able to develop policies to mitigate environmental externalities, the existence and degree of pass-through associated with externality taxation or pricing has been postulated to be strongly linked to the degree of market power possessed by the firm(s) being charged. In any case, the practical magnitude of this effect is poorly understood. This situation is no different in the critical maritime shipping industry, which now finds itself subject to controversial environmental taxation. To understand what might occur under this policy in this very concentrated industry, the authors develop a detailed economic experiment that emulates the relationship between a monopoly carrier and a set of shippers. The experimental framework produces stylized data to be tested for several relevant behavioral and industry hypotheses. Experimentation also allows the authors to assess the effects of parameter variation across key determinants of environmental pass-through relevant to maritime shipping. Such factors in this analysis include (but are not limited to) market demand, timing of tax implementation and relative levels of shipper costs. The authors find that in this high market power situation, some limited pass through of the imposed environmental tax occurs, but its magnitude is far less then predicted under the market circumstances. The latter may be a consequence of beliefs about individual fairness that sometimes occur in experimental situations.
- Record URL:
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Supplemental Notes:
- This paper was sponsored by TRB committee AT010 Standing Committee on Freight Transportation Economics and Regulation.
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Corporate Authors:
Transportation Research Board
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Authors:
- Nolan, James
- Mantin, Benny
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Conference:
- Transportation Research Board 100th Annual Meeting
- Location: Washington DC, United States
- Date: 2021-1-5 to 2021-1-29
- Date: 2021
Language
- English
Media Info
- Media Type: Digital/other
- Features: Appendices; Figures; References; Tables;
- Pagination: 48p
Subject/Index Terms
- TRT Terms: Cargo ships; Environmental policy; Externalities; Maritime industry; Market dominance; Monopoly; Shipping; Taxation; Taxes
- Subject Areas: Economics; Environment; Finance; Marine Transportation; Policy;
Filing Info
- Accession Number: 01764804
- Record Type: Publication
- Report/Paper Numbers: TRBAM-21-03055
- Files: TRIS, TRB, ATRI
- Created Date: Feb 16 2021 4:00PM