Cross-border Shopping of Alcohol - What is the Effect on Tax Revenue and Sales and Which Products Are Most Affected?

We use COVID-19 border closings and comprehensive store-level data on Norwegian alcohol sales to quantify the effect cross-border shopping of alcohol on sales volume and commodity tax revenue. Effects are large, for instance we estimate that commodity tax revenue for wine is about 20% lower because of cross-border shopping. Using product level data we establish that effects come from across all products rather than just a few, but effects are especially marked for bag-in-box wines. Neither availability of the exact same product in Sweden nor idiosyncratic product-level price difference with respect to Sweden has any marked effect on the impact of cross-border shopping on sales.

Keywords: Cross-border shopping, Commodity taxes, Excise taxes, Tax competition

JEL Classification: D62, F15, H20

Suggested Citation: Suggested Citation

Friberg, Richard and Ulsaker, Simen A. and Steen, Frode, Cross-border Shopping of Alcohol - What is the Effect on Tax Revenue and Sales and Which Products Are Most Affected? (July 04, 2024). NHH Dept. of Economics Discussion Paper No. 12/2024, The paper has appeared in a Paper Series: https://openaccess.nhh.no/nhh-xmlui/handle/11250/3138471, Available at SSRN: https://ssrn.com/abstract=4885922 or http://dx.doi.org/10.2139/ssrn.4885922