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

National Tax Journal 71(3): 427-450

36 Pages Posted: 21 Aug 2017 Last revised: 14 Jan 2019

See all articles by Kyle Rozema

Kyle Rozema

Washington University in St. Louis - School of Law

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). National Tax Journal 71(3): 427-450. Available at SSRN: https://ssrn.com/abstract=3022786 or http://dx.doi.org/10.2139/ssrn.3022786

Kyle Rozema (Contact Author)

Washington University in St. Louis - School of Law ( email )

Campus Box 1120
St. Louis, MO 63130
United States

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