Slides
Lecture 1
Incidence Theory
Pre-class
- Watch these two videos from MRU on tax incidence (link 1 and link 2)
Post-class
- Work through the math and graphs from the slides on your own.
- Be sure that you can draw the change in surplus each side of the market faces in response to a tax.
- Then, using the same graphs, relate those changes to the incidence elasticity formula. When you make one side more responsive, what happens to its incidence?
- Do this practice problem
Key points
- We discuss the difference between statutory and economic incidence in the context of taxation.
Lecture 2
Estimating elasticities + Incidence of the shale boom
Pre-class
- Read this background article on the shale revolution.
- I basically just want you to understand the history, timeline and scale of the change in US oil and gas production.
- Then read “Welfare and Distributional Implications of Shale Gas” by Ryan Kellogg and Catie Hausman.
- They study the incidence of the shale boom, using the incidence framework we discussed last class. Just read the intro and the background section, and skim / ask AI to help you understand the broad approach to estimating incidence.
- We are going to focus specifically on how they estimate elasticities, and how they use those elasticities to estimate incidence.
Additional material
- “$2.00 Gas! Studying the effects of a gas tax moratorium” link
- “Pass-Through of Own and Rival Cost Shocks: Evidence from the U.S. Fracking Boom” link