The Impact of the Philadelphia Beverage Tax on Prices and Product Availability

48 Pages Posted: 3 Oct 2018

See all articles by John Cawley

John Cawley

Cornell University - College of Human Ecology, Department of Policy Analysis & Management (PAM); Cornell University - College of Arts & Sciences, Department of Economics; Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); National University of Ireland, Galway (NUIG) - J.E. Cairnes School of Business & Economics; NBER; IZA

David E. Frisvold

University of Iowa - Henry B. Tippie College of Business - Department of Economics

Anna Hill

Mathematica Policy Research

David Jones

Mathematica Policy Research, Inc.

Multiple version iconThere are 2 versions of this paper

Date Written: July 31, 2018

Abstract

In recent years, numerous cities in the U.S. have enacted taxes on beverages to promote health and raise revenue. This paper examines the impact of Philadelphia’s beverage tax, enacted in 2017, on the prices and availability of taxed beverages and untaxed beverages that may be substitutes for consumers. Using original data we collected in late 2016 and again one year later, we estimate a difference-in-differences regression of the change over time in beverage prices and product availability in stores in Philadelphia relative to stores in nearby counties. We find that, on average, distributors and retailers fully pass the tax through to consumers, but the there is heterogeneity in the pass-through rate among stores. Pass-through is greater among stores in higher-poverty neighborhoods, stores located farther from untaxed stores outside Philadelphia, stores that are independent as opposed to part of national chains, and for individual servings than for larger sizes. We also find a reduction in the availability of taxed beverages and an increase in the availability of untaxed beverages, particularly bottled water, in Philadelphia stores.

JEL Classification: H22, I18

Suggested Citation

Cawley, John and Frisvold, David E. and Hill, Anna and Jones, David, The Impact of the Philadelphia Beverage Tax on Prices and Product Availability (July 31, 2018). Available at SSRN: https://ssrn.com/abstract=3247248 or http://dx.doi.org/10.2139/ssrn.3247248

John Cawley

Cornell University - College of Human Ecology, Department of Policy Analysis & Management (PAM) ( email )

3M24 MVR Hall
Ithaca, NY 14853
United States

Cornell University - College of Arts & Sciences, Department of Economics ( email )

414 Uris Hall
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United States

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

National University of Ireland, Galway (NUIG) - J.E. Cairnes School of Business & Economics ( email )

Galway
Ireland

NBER

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Cambridge, MA 02138
United States

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

David E. Frisvold (Contact Author)

University of Iowa - Henry B. Tippie College of Business - Department of Economics ( email )

21 E. Market St
Iowa City, IA 52242
United States
319-335-0957 (Phone)

HOME PAGE: http://www.biz.uiowa.edu/frisvold/

Anna Hill

Mathematica Policy Research ( email )

955 Massachusetts Ave
Suite 800
Cambridge, MA 02139
United States

David Jones

Mathematica Policy Research, Inc. ( email )

955 Massachusetts Ave
Suite 801
Cambridge, MA 02139
United States
617-674-8351 (Phone)

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