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The impact of the Philadelphia beverage tax on prices and product availability
Working paper   Open access

The impact of the Philadelphia beverage tax on prices and product availability

John H. Cawley, David E Frisvold, Anna Hill and David Jones
NBER working paper series, Vol.24990
National Bureau of Economic Research
09/2018
DOI: 10.3386/w24990
url
https://doi.org/10.3386/w24990View
Open Access

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 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
 Consumer Behavior Economics Carbonated beverages Econometric models Management Nondurable goods Prices Soft drinks Supply and demand Taxation

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