THE PAKISTAN DEVELOPMENT REVIEW
A Note on Petrol Versus Diesel Transport An Assessment of a Policy Option
The policy of higher tax on petrol than on diesel gasoline encourages diesel transport. This may cause distortion and suboptimal allocation. This note is aimed at testing this hypothesis empirically. The First section briefly describes the petrol versus diesel argument. In the Second section cost comparisons are made for two petrol and diesel vehicles of comparable performance. The conclusion and policy options are discussed in the Third section.