Auto Exec: "Raise the Gas Tax"

When I saw that General Motors CEO Dan Akerson proposed a federal gas tax increase of as much as $1.00 per gallon, the first thing that came to my mind was "Raising Rivals Costs." That is, I assumed that GM had new cars that were more fuel efficient than its rivals'. While higher prices for a complementary good, gasoline, would decrease demand for all cars, it will have different effects on different car makers. Akerson's example here was to shift consumer to GM's relatively efficient Cruze.

But perhaps there is a more likely explanation. The same article also suggests that Mr Akerson was proposing the tax increase as an alternative to corporate average fuel economy (CAFE) standards. CAFE standards are more complex and have been found to have perverse incentives.

Perhaps less likely is that Mr. Akerson has simply gone green.