Data and code for: Optimal sin taxation and market power
Principal Investigator(s): View help for Principal Investigator(s) Martin O'Connell, UW-Madison; Kate Smith, London School of Economics
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
|---|---|---|---|
| DataInputs | 07/18/2023 01:47:PM | ||
| DataTaxFiles | 07/19/2023 09:46:AM | ||
| EstimationOutputs | 07/18/2023 01:48:PM | ||
| ProgramsA | 09/15/2023 07:12:PM | ||
| ProgramsB | 07/19/2023 09:52:AM | ||
| ProgramsC | 09/15/2023 07:13:PM | ||
| Results | 12/22/2022 02:13:PM | ||
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application/pdf | 361.7 KB | 09/15/2023 03:10:PM |
Project Citation:
O’Connell, Martin, and Smith, Kate. Data and code for: Optimal sin taxation and market power. Nashville, TN: American Economic Association [publisher], 2024. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2024-08-23. https://doi.org/10.3886/E183642V1
Project Description
Summary:
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Replication code for Optimal sin taxation and market power. Paper abstract:
We study how market power impacts the efficiency and redistributive properties of sin taxation, with an empirical application to sugar-sweetened beverage taxation. We estimate a detailed equilibrium model of the UK drinks market, which we embed in a tax design framework to solve for optimal sugar-sweetened beverage tax policy. Positive price-cost margins on drinks create inefficiencies, which act to lower the optimal rate compared with a perfectly competitive setting. However, since profits mainly accrue to the rich, this is partially mitigated under social preferences for equity. Overall, ignoring market power when setting the optimal sugar-sweetened beverage tax rate leads to welfare gains that are 40% below those at the optimum.
We study how market power impacts the efficiency and redistributive properties of sin taxation, with an empirical application to sugar-sweetened beverage taxation. We estimate a detailed equilibrium model of the UK drinks market, which we embed in a tax design framework to solve for optimal sugar-sweetened beverage tax policy. Positive price-cost margins on drinks create inefficiencies, which act to lower the optimal rate compared with a perfectly competitive setting. However, since profits mainly accrue to the rich, this is partially mitigated under social preferences for equity. Overall, ignoring market power when setting the optimal sugar-sweetened beverage tax rate leads to welfare gains that are 40% below those at the optimum.
Funding Sources:
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Economic and Social Research Council (ES/T014334/1);
Economic and Social Research Council (ES/VO13513/1);
British Academy (pf160093)
Scope of Project
Subject Terms:
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Observation data
JEL Classification:
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D12 Consumer Economics: Empirical Analysis
D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
D61 Allocative Efficiency; Cost-Benefit Analysis
D62 Externalities
H21 Taxation and Subsidies: Efficiency; Optimal Taxation
H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L13 Oligopoly and Other Imperfect Markets
D12 Consumer Economics: Empirical Analysis
D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
D61 Allocative Efficiency; Cost-Benefit Analysis
D62 Externalities
H21 Taxation and Subsidies: Efficiency; Optimal Taxation
H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L13 Oligopoly and Other Imperfect Markets
Geographic Coverage:
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Great Britain
Time Period(s):
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1/1/2008 – 12/31/2012
Collection Date(s):
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1/1/2008 – 12/31/2012
Universe:
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Households residing in Great Britain
Data Type(s):
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other
Methodology
Data Source:
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Kantar FMCG Purchase Panel and Kantar Food-On-The-Go Survey
Unit(s) of Observation:
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Households
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