Photo of Erich Muehlegger

Erich Muehlegger is a Professor of Economics at the University of California, Davis, and a research associate of the National Bureau of Economic Research.

His research interests include industrial organization, public finance, economic regulation, and environmental policy.

Muehlegger received his BA from Williams College in 1997 and his PhD from MIT in 2005. He taught at the Harvard Kennedy School from 2005-2014 and has taught at UC Davis since 2014.

 

 

Recent Research Highlights

The Effects of Competition in the Retail Gasoline Industry (with Reid Taylor)

We estimate the effect of competition on incumbent firm pricing by using high frequency price data and the precise geographic location for all gas stations in California. Using an event study design, we find that the entry of a new station is associated with a 2.5 cent decrease in prices at incumbent stores, which equates to a 7% reduction in estimated retail markups. The effects are immediate, persistent, and show no sign of deterrence or limit pricing behavior. In contrast, nearby exit results in precisely estimated null effects on prices with no evidence of predatory pricing in the lead up to the station departure. We show that these results are consistent across all fuel blends, dissipate with distance, and are driven by less concentrated markets. Finally, we explore the asymmetric effects, showing that the difference cannot be attributed to difference in branding, proximity to highway, or data quality idiosyncrasies, although we find suggestive evidence that exit tends to happen in more competitive markets and amongst less heavily trafficked stations.

Ideology, Incidence and the Political Economy of Fuel Taxes: Evidence from California 2018 Proposition 6 (with Lucas Epstein)

In 2018, California voters rejected Proposition 6, a ballot initiative that sought to repeal state gasoline taxes and vehicle fees enacted as part of the 2017 Road Repair and Accountability Act. We study the relationship between support for the proposition, political ideology and the economic burdens imposed by the Act. For every hundred dollars of annual per-household imposed costs, we estimate that support for the proposition rose by 3 - 5 percentage points. Notably, we find that the relationship between voting and the economic burden of the policy is seven times stronger in the most conservative tracts relative to the most liberal tracts. Since conservative areas in California and elsewhere tend to bear a higher burden from transportation and energy taxes than liberal areas, heterogeneity in the response to economic burdens has important implications for the popular support for environmental taxes and the ongoing policy debate about how to finance future road infrastructure.

Energy Prices and Electric Vehicle Adoption (with James Bushnell and David Rapson), Revisions requested at JPE: Micro

This paper provides the first evidence on how electric vehicle (EV) sales respond to energy prices. Using EV registrations in California, we use a border-discontinuity strategy exploiting sharp changes in residential electricity prices between utilities. EV sales are six times more sensitive to gasoline prices than to electricity prices. However, EV retention decreases with local electricity prices, suggesting that owners learn by experience about operating costs. Results inform optimal subsidy and tax policy. If consumers underestimate EV cost of ownership, optimal purchase incentives combine a subsidy to address external benefits with a tax to address consumer mis-optimization.