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Tax design in the alcohol market

Rachel Griffith (), O’Connell, Martin and Kate Smith
Authors registered in the RePEc Author Service: Martin O'Connell

Journal of Public Economics, 2019, vol. 172, issue C, 20-35

Abstract: Alcohol consumption generates negative externalities that are non-linear in the total amount of alcohol consumed. If tastes for products are heterogeneous and correlated with marginal externalities, then varying tax rates on different products can lead to welfare gains. We study this problem in an optimal tax framework and empirically for the UK market. We find that heavy drinkers have systematically different patterns of alcohol demands and welfare gains from optimally varying rates are higher the more concentrated externalities are among heavy drinkers.

Keywords: Externality; Corrective taxes; Alcohol (search for similar items in EconPapers)
JEL-codes: D12 D62 H21 H23 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Tax design in the alcohol market (2017) Downloads
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