The kilometer tax and Swedish industry - Effects on sectors and regions

In: Applied Economics

Abstract

An introduction of a kilometer tax for heavy goods vehicles can be constrained by the risk of that higher production costs than competitors in other countries will negatively affect regions and industries of policy concern. We estimate factor demand elasticities in the Swedish manufacturing industry using firm level data for the 1990-2001 period on input prices and quantities. The results show that the introduction of a kilometer tax for heavy goods vehicles decreases transport demand and increases labor demand. The effects are less pronounced in terms of changes in output, though some industries (e.g. wood, and pulp- and paper) can be expected to be affected more than others due to their dependence on road freight transport. The regional dimension regarding the consequences of a kilometer tax seems to be small or even non-existing. [author's abstract]