The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium

Rossi Abi-Rafeh, Pierre Dubois, Rachel Griffith and Martin O'Connell

No 18527, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a dynamic equilibrium model of firm competition to study the impact of counterfactual policies, such as taxes and advertising restrictions, on pricing, advertising, consumption and welfare. We estimate the model using micro level data on the market for colas. We use consumer level exposure to television commercials to estimate the impact of advertising on product choice, model firms' dynamic competition through their choice of advertising budgets and product prices, and exploit firms' practice of delegating decisions over advertising slots to agencies to link the rich consumer level advertising variation with firms' strategic choice variables. We show that a sugar-sweetened beverage tax leads to a reduction in advertising and that the incremental effects of implementing advertising restrictions are substantially reduced with a tax in place.

JEL-codes: D12 H22 I18 L13 M37 (search for similar items in EconPapers)
Date: 2023-10
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18527 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium (2025)
Working Paper: The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18527

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18527

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().