Arbeitspapier
Soda tax incidence and design under monopoly
We consider an unhealthy good, such as a sugar-sweetened beverage, the health damages of which are misperceived by consumers. The sugar content is endogenous. We first study the solution under “pseudo” perfect competition. In that case a simple Pigouvian tax levied per unit of output but proportional to the sugar content is sufficient to achieve a first best solution. Then we consider a monopoly. Market power affects both output and sugar content, possibly in opposite directions, and these effects have to be balanced against Pigouvian considerations. We show that, nevertheless, a tax per unit of output achieves an efficient solution, but it must be an affine function of the sugar content; taxing “grams of sugar” is no longer sufficient. Interestingly, both the total tax as well as its sugar component can be positive as well as negative.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 7525
- Classification
-
Wirtschaft
Taxation and Subsidies: Incidence
Health Behavior
Market Structure, Pricing, and Design: Monopoly
- Subject
-
sin tax
tax incidence
misperception
monopoly
- Event
-
Geistige Schöpfung
- (who)
-
Cremer, Helmuth
Goulão, Catarina
Lozachmeur, Jean-Marie
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Cremer, Helmuth
- Goulão, Catarina
- Lozachmeur, Jean-Marie
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2019
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