Supply Side Incidence of Consumption Taxes

Kyle Rozema

Northwestern University - Pritzker School of Law

October 5, 2016

I investigate the supply side incidence of commodity taxes. My empirical analysis employs a unique panel dataset of nearly 35,000 retail establishments that directly captures pricing behavior (markup) and profits generated from cigarette sales. Higher cigarette taxes drive down profits of convenience stores but not of grocery, drug, and liquor stores. Because a higher proportion of convenience stores are small businesses, my findings suggest that cigarette taxes are regressive on the supply side of the retail market.

Number of Pages in PDF File: 60

Keywords: Tax Incidence, Consumption Taxes, Firm Behavior

JEL Classification: H22, H25, H32, L11, L13, L14, K34

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Date posted: March 7, 2016 ; Last revised: October 6, 2016

Suggested Citation

Rozema, Kyle, Supply Side Incidence of Consumption Taxes (October 5, 2016). Available at SSRN: https://ssrn.com/abstract=2742254 or http://dx.doi.org/10.2139/ssrn.2742254

Contact Information

Kyle Rozema (Contact Author)
Northwestern University - Pritzker School of Law ( email )
375 E. Chicago Ave
Chicago, IL 60611
United States
HOME PAGE: http://www.kylerozema.com

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