This repository provides the coding for the research project "The Distributional Consequences of Tax Pass-Through: The Case of Germany's Fuel Tax Discount".
Authors: Prof. Dr. Manuel Frondel, Dr. Patrick Thiel and Prof. Dr. Colin Vance
Code author: Dr. Patrick Thiel
DOI: https://doi.org/10.1016/j.regsciurbeco.2025.104183
Exploiting exogenous variation in retail fuel prices from a temporary fuel tax discount in Germany, we explore the distributional consequences emerging from differential pass-through rates over space and time. We draw on daily gasoline prices of virtually all gas stations in Germany and neighboring France, with France serving as a control site, and estimate an event study model covering the full period of the discount from June to August 2022. We find average pass-through rates on the order of 96% for diesel and 82% for petrol, but with substantial variability by regional income and station density. Our results additionally reveal heterogeneity over time: The magnitude of the pass-through rate dissipates sharply for both fuel types over the three months in which the discount was in effect, dropping to 46% for diesel and 74% for petrol by the final month, a pattern consistent with retailer responses to short-term changes in consumer attention. Taken together, our results indicate that average pass-through estimates may obscure spatial and temporal heterogeneity that bears upon the assessment of distributional effects: A back-ofthe envelop calculation indicates that 62% of the discount’s financial relief accrues to households with above-median incomes.
Keywords: Competition, demand elasticity, gasoline market
JEL Classifications: L13, L81, D43
Note: The paper has been published in in Regional Science and Urban Economics.
Frondel, Manuel and Thiel, Patrick and Vance, Colin. (2026) The distributional consequences of tax pass-through: The case of Germany's fuel tax discount. Regional Science and Urban Economics, Vol 117, 104183. https://doi.org/10.1016/j.regsciurbeco.2025.104183.