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Partial versus General Equilibrium Calorie and Revenue Effects Associated with a Sugar-Sweetened Beverage Tax

Senarath Dharmasena, George Davis and Capps, Oral,

No 285222, Reports from Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center

Abstract: Taxes on sugar-sweetened beverages have been widely proposed to combat the U.S. obesity crisis. Most previous work has found the effects of a SSB tax to be small to moderate. We address three limitations. First, we incorporate the supply side via a stochastic equilibrium displacement model. Second, we account for uncertainty in the underlying elasticities using probability distributions associated with elasticities. Third, we address industry revenue effects. We find that assumptions about the supply side are more important than assumptions about substitution. Ignoring supply side severely overestimates quantity and calorie effects and slightly underestimates revenue effects.

Keywords: Agricultural and Food Policy; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Date: 2014-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:ags:tamagr:285222

DOI: 10.22004/ag.econ.285222

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