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Project Citation: 

Conlon, Christopher, and Rao, Nirupama. Data and Code for: Discrete Prices and the Incidence and Efficiency of Excise Taxes. Nashville, TN: American Economic Association [publisher], 2020. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2020-06-17.

Project Description

Summary:  View help for Summary This paper uses UPC-level data to examine the relationship between excise taxes, retail prices, and consumer welfare in the distilled spirits market. We document a nominal rigidity in retail prices that arises because firms largely choose prices that end in ninety-nine cents and change prices in whole-dollar increments. A correctly specified model, like an ordered logit, takes this discreteness into account when predicting the effects of alternative taxes. Explicitly accounting for price points substantially impacts estimates of tax incidence and the excess burden cost of tax revenue. Meaningful non-monotonicities in these quantities expand the potential considerations in setting excise taxes.

Scope of Project

Subject Terms:  View help for Subject Terms Excise Tax; Incidence; Market power; Price Adjustment; Nominal Rigidities
JEL Classification:  View help for JEL Classification
      H21 Taxation and Subsidies: Efficiency; Optimal Taxation
Geographic Coverage:  View help for Geographic Coverage United States (Connecticut, Louisiana, Illinois)
Time Period(s):  View help for Time Period(s) 7/1/2007 – 7/31/2013
Collection Date(s):  View help for Collection Date(s) 7/2013 – 8/2013 (Summer 2013)
Universe:  View help for Universe Wholesale Alcohol Prices for Connecticut.
Data Type(s):  View help for Data Type(s) event/transaction data; program source code
Collection Notes:  View help for Collection Notes The Connecticut Wholesale Prices were scraped by the authors and assembled from public filings from the Department of Consumer Protection.


Unit(s) of Observation:  View help for Unit(s) of Observation Wholesaler-Product-Month

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