Tuesday, June 14, 2011

Aldyen Donnelly's Latest at Energy Probe

Aldyen Donnelly: BCAA’s conclusions about hybrid vehicles | Energy Probe

Interestingly enough, if you go back to your Econ 300 micro and macro economic textbooks, you might discover that the economic theory we were taught a few decades ago actually suggest the same thing.  The older textbooks ... suggest that for a tax/price increase to effectively and efficiently impact consumer demand, the tax/price impact has to be revealed to/experienced by the consumer at a point of a “primary” consumption decision, not a “secondary” or derived consumption decision.  Most fuel/energy purchases by non-industrial consumers are secondary or derived from their decisions to locate their home and the vehicles they buy.  So even the traditional general economic theorists told us, so many years ago, that if we want to change energy demand in as economically efficient a fashion as possible, we likely would need to tax (to the extent this is the policy mechanism of choice) home and car purchases (primary capital expenditure decisions) and not energy/fuel purchases (secondary, variable, operating costs).

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