Local Excise Taxes, Sticky Prices, and Spillovers: Evidence from Berkeley's Soda Tax
79 Pages Posted: 14 Dec 2017 Last revised: 13 Jan 2018
Date Written: January 12, 2018
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: Suggested Citation