Document Type

Working Paper

Publication Date



Carbon taxes, Infrastructure (Economics), Economic conditions, United States -- Carbon taxes -- Econometric models, Roads -- Finance


The basic insight behind carbon pricing is not new, and is based in mainstream economic theory. If market interactions are leading to the overuse of resources outside of the market, imposing a price on the overused resource will bring it into the market and increase efficiency. Currently, the negative impacts associated with the release of carbon through fossil fuel combustion is not incorporated into the market. By imposing a price on carbon, fossil fuel consumers are incentivized to reduce their fuel usage. This reduction in fuel demand is not necessarily associated with lower economic output. In fact, depending on the use of the revenue, a carbon tax might lead to net increases in employment and output. Because of Oregon’s constitutional requirements related to transportation fuel tax revenues, a tax on carbon would significantly increase highway funding in the state. This increase in funding would akin to a public stimulus project which would reach every region in Oregon.


NERC is based at Portland State University in the College of Urban and Public Affairs. The Center focuses on economic research that supports public-policy decision-making, and relates to issues important to Oregon and the Portland Metropolitan Area. NERC serves the public, nonprofit, and private sector community with high quality, unbiased, and credible economic analysis.

Persistent Identifier


Portland State University. College of Urban and Public Affairs. Northwest Economic Research Center