Interactive split of a $2 tax by elasticity SD S + tax Quantity (millions of gallons a week) Price per gallon ($) $5 $6 $4 10 8 No tax Drivers bear of the $2 tax Stations bear $1 $1 Original market: drivers pay $6, stations keep $4, 8M gallons trade. Neither side responds less than the other to aprice change, so each bears $1 of the $2 tax. Original market Steeper demand Steeper supply xx