Tax Incidence in a Vertical Supply Chain: Evidence from Cigarette Wholesale Prices

36 Pages Posted: 21 Aug 2017 Last revised: 20 Apr 2018

Kyle Rozema

University of Chicago - Law School

Date Written: April 10, 2018

Abstract

I investigate how the burden of consumption taxes not borne by consumers is shared between upstream firms that produce a taxed good and downstream firms that sell the goods. Using novel data on monthly brand-level cigarette wholesale prices and retail prices from Nielsen homescan data, I find that downstream firms that sell cigarettes bear no more than one-third of the firm share of the tax burden.

Keywords: Tax Incidence, Consumption Taxes, Supply Chain

JEL Classification: H22, H32, H71, L11, K34, L66, D12

Suggested Citation

Rozema, Kyle, Tax Incidence in a Vertical Supply Chain: Evidence from Cigarette Wholesale Prices (April 10, 2018). Available at SSRN: https://ssrn.com/abstract=3022786 or http://dx.doi.org/10.2139/ssrn.3022786

Kyle Rozema (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

HOME PAGE: http://www.kylerozema.com

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