Quote:
Originally posted by Mmmm, Burger (C.J.)
It's equally easy to envision it the other way around. Basic economics teaches that the incidence of a tax falls more upon the seller/buyer whose supply/demand is more inelastic. If consumer demand is inelastic, but has some elasticity (which even in the short run it does), whereas refiners have no elasticity of supply because of capacity constraints, then they will bear the full amount of the tax.
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What you're saying here doesn't make sense to me, though perhaps the failure is mine. Assume that producers cannot substantially increase production beyond current levels. If the taxes were to disappear tomorrow, why would they not pocket that margin and leave their prices the same? If they have limited ability to bring refined gasoline in from other countries, then maybe that affects the price a little on the margin, but there can't be much capacity there.
