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The Impact of the Philadelphia Beverage Tax on Prices and Product Availability

John Cawley (), David Frisvold (), Anna Hill and David Jones

No 24990, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In recent years, numerous cities in the U.S. have enacted taxes on beverages to promote health and raise revenue. This paper examines the impact of Philadelphia’s beverage tax, enacted in 2017, on the prices and availability of taxed beverages and untaxed beverages that may be substitutes for consumers. Using original data we collected in late 2016 and again one year later, we estimate a difference-in-differences regression of the change over time in beverage prices and product availability in stores in Philadelphia relative to stores in nearby counties. We find that, on average, distributors and retailers fully pass the tax through to consumers, but there is heterogeneity in the pass-through rate among stores. Pass-through is greater among stores in higher-poverty neighborhoods, stores located farther from untaxed stores outside Philadelphia, stores that are independent as opposed to part of national chains, and for individual servings than for larger sizes. We also find a reduction in the availability of taxed beverages and an increase in the availability of untaxed beverages, particularly bottled water, in Philadelphia stores.

JEL-codes: H22 I18 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-hea and nep-pbe
Note: HE PE
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Published as Cawley, John, David Frisvold, Anna Hill, and David Jones. Forthcoming, 2020. “The Impact of the Philadelphia Beverage Tax on Prices and Product Availability.” Journal of Policy Analysis & Management.

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