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

79 Pages Posted: 14 Dec 2017 Last revised: 13 Jan 2018

Bryan Bollinger

Duke University - Fuqua School of Business

Steven Sexton

Duke University Sanford School of Public Policy

Date Written: January 12, 2018

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 modestly increases supermarket prices of some soda products, constituting a minority of soda consumption. 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.

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 (January 12, 2018). Available at SSRN: https://ssrn.com/abstract=3087966 or http://dx.doi.org/10.2139/ssrn.3087966

Bryan Bollinger (Contact Author)

Duke University - Fuqua School of Business ( email )

United States
9196607766 (Phone)

HOME PAGE: http://bryanbollinger.com

Steven Sexton

Duke University Sanford School of Public Policy ( email )

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

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