Local Excise Taxes, Sticky Prices, and Spillovers: Evidence from Berkeley's Soda Tax

Quantitative Marketing and Economics, forthcoming.

82 Pages Posted: 14 Dec 2017 Last revised: 15 May 2023

See all articles by Bryan Bollinger

Bryan Bollinger

New York University (NYU) - Department of Marketing

Steven Sexton

Duke University Sanford School of Public Policy

Date Written: March 31, 2023

Abstract

This paper evaluates the price and consumption effects of the first municipal soda tax imposed
in the United States. Using high-resolution scanner data and data-driven approaches to select
comparison units for counterfactual analysis, we estimate the tax has no effect on prices or
consumption at drugstores, but increases supermarket prices of some soda products, constituting
a minority of soda consumption. We estimate UPC-level pass through rates and find that there
is significant heterogeneity across UPCs, much of which is explained by brand and size; average
UPC-level pass through estimates in the supermarket range between 19% and 23%. We find
limited evidence of reduced supermarket purchases of soda in the taxed jurisdiction. Half of these
reduced purchases are substituted to just outside the taxed jurisdiction. Retailers’ limited price
responses are attributed to the localness of the tax; other research studying the Philadelphia
soda tax has demonstrated more substantial pass-through in this much larger jurisdiction.

JEL Classification: D12, H26, I12, I18

Suggested Citation

Bollinger, Bryan and Sexton, Steven, Local Excise Taxes, Sticky Prices, and Spillovers: Evidence from Berkeley's Soda Tax (March 31, 2023). Quantitative Marketing and Economics, forthcoming., Available at SSRN: https://ssrn.com/abstract=3087966 or http://dx.doi.org/10.2139/ssrn.3087966

Bryan Bollinger (Contact Author)

New York University (NYU) - Department of Marketing ( email )

40 W 4th St
Tisch 804
New York, NY 10012
United States

Steven Sexton

Duke University Sanford School of Public Policy ( email )

201 Science Drive
Box 90312
Durham, NC 27708-0239
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,167
Abstract Views
5,685
Rank
33,237
PlumX Metrics