Several countries have introduced taxes on fossil fuels with the aim of reducing atmospheric emissions, partly because of local environmental goals (SO<Subscript>2</Subscript>, NO<Subscript>x</Subscript>) and partly to participate in a global effort to reduce emissions of greenhouse gases. Many macroeconomic studies, based on both global...</subscript></subscript>

Heterogeneity in consumer behaviour may create problems with aggregation across consumers. If so, we may not be able to make correct inferences about behaviour based on aggregated data. However, using micro estimates to predict aggregate demand responses to policy changes may also create a bias...