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Soda tax incidence and design under monopoly

Cremer, Helmuth, Goulão, Catarina and Lozachmeur, Jean-Marie (2019) Soda tax incidence and design under monopoly. TSE Working Paper, n. 19-992, Toulouse

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Health damages of an unhealthy good, such as a sugar-sweetened beverage, are misperceived by consumers. Market power affects both output and sugar content and these effects have to be balanced against Pigouvian considerations. Under “pseudo” perfect competition, a Pigouvian tax proportional to sugar content is sufficient to achieve a first best solution. Under monopoly, a specific tax on output achieves an efficient solution, but it must be an affine function of the sugar content. The calibrations of the French and US markets illustrate that both the total tax as well as its sugar component can be positive or negative.

Item Type: Monograph (Working Paper)
Language: English
Date: February 2019
Place of Publication: Toulouse
Uncontrolled Keywords: sin tax, sin tax, tax incidence, tax incidence, misperception, misperception, monopoly, monopoly
JEL Classification: D42 - Monopoly
H22 - Incidence
I12 - Health Production - Nutrition, Mortality, Morbidity, Suicide, Substance Abuse and Addiction, Disability, and Economic Behavior
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 19 Feb 2019 09:25
Last Modified: 02 Apr 2021 16:00
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