IDEAS home Printed from https://ideas.repec.org/a/wly/ajagec/v106y2024i2p967-981.html
   My bibliography  Save this article

Taxing sugar‐sweetened beverages: A nonlinear pricing approach

Author

Listed:
  • José G. Nuño‐Ledesma
  • Steven Y. Wu
  • Joseph V. Balagtas

Abstract

Taxation is frequently implemented to discourage the consumption of sugary beverages. Despite their popularity, little is known about the impacts of taxes when sellers practice price discrimination. To address this issue, we use a standard nonlinear pricing model with one product and two buyer types to study the effects of taxation on (i) consumption, (ii) consumer and producer surpluses, and (iii) the seller's choice of market segmentation scheme. We find that a tax would lead to reductions in consumption, consumer surplus, and expected profit. Additionally, the measure increases the likelihood that the sellers would exclude buyers with low preferences for the beverage to exclusively serve buyers with high willingness to pay for the product.

Suggested Citation

  • José G. Nuño‐Ledesma & Steven Y. Wu & Joseph V. Balagtas, 2024. "Taxing sugar‐sweetened beverages: A nonlinear pricing approach," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 967-981, March.
    • Handle: RePEc:wly:ajagec:v:106:y:2024:i:2:p:967-981
    DOI: 10.1111/ajae.12416
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ajae.12416
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ajae.12416?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Christine Moorman & Rosellina Ferraro & Joel Huber, 2012. "Unintended Nutrition Consequences: Firm Responses to the Nutrition Labeling and Education Act," Marketing Science, INFORMS, vol. 31(5), pages 717-737, September.
    2. Igal Hendel & Aviv Nevo, 2013. "Intertemporal Price Discrimination in Storable Goods Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2722-2751, December.
    3. Jeffrey Grogger, 2017. "Soda Taxes And The Prices of Sodas And Other Drinks: Evidence From Mexico," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 481-498.
    4. Michael L. Anderson & David A. Matsa, 2011. "Are Restaurants Really Supersizing America?," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 152-188, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. O'Connell, Martin & Smith, Kate, 2020. "Corrective Tax Design and Market Power," CEPR Discussion Papers 14582, C.E.P.R. Discussion Papers.
    2. Martin O'Connell & Kate Smith, 2024. "Optimal Sin Taxation and Market Power," American Economic Journal: Applied Economics, American Economic Association, vol. 16(4), pages 34-70, October.
    3. Kristin Kiesel & Mengxin Ji, 2021. "Did state‐mandated restrictions on sugar‐sweetened drinks in California high schools increase soda purchases in school neighborhoods?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1443-1475, December.
    4. Marit Hinnosaar, 2023. "The Persistence of Healthy Behaviors in Food Purchasing," Marketing Science, INFORMS, vol. 42(3), pages 521-537, May.
    5. Nuño Ledesma José G. & Wu Steven Y. & Balagtas Joseph V., 2022. "Nonlinear Pricing Under Regulation: Comparing Cap Rules and Taxes in the Laboratory," Working Papers 2022-10, Banco de México.
    6. Hinnosaar, Marit, 2016. "Time inconsistency and alcohol sales restrictions," European Economic Review, Elsevier, vol. 87(C), pages 108-131.
    7. Adamopoulou, Effrosyni & Olivieri, Elisabetta & Triviza, Eleftheria, 2024. "Eating habits, food consumption, and health: The role of early life experiences," European Economic Review, Elsevier, vol. 166(C).
    8. Pierre Dubois & Rachel Griffith & Martin O'Connell, 2020. "How Well Targeted Are Soda Taxes?," American Economic Review, American Economic Association, vol. 110(11), pages 3661-3704, November.
    9. Escobari, Diego, 2014. "Estimating dynamic demand for airlines," Economics Letters, Elsevier, vol. 124(1), pages 26-29.
    10. Katja Seim & Michael Sinkinson, 2016. "Mixed pricing in online marketplaces," Quantitative Marketing and Economics (QME), Springer, vol. 14(2), pages 129-155, June.
    11. John Cawley & Chelsea Crain & David Frisvold & David Jones, 2018. "The Pass-Through of the Largest Tax on Sugar-Sweetened Beverages: The Case of Boulder, Colorado," NBER Working Papers 25050, National Bureau of Economic Research, Inc.
    12. Zhang, Yinjunjie & Palma, Marco A., 2018. "Revisiting the Effects of Sugar Tax on Demand Elasticities - Evidence from the BLP Demand Model," 2018 Annual Meeting, August 5-7, Washington, D.C. 273978, Agricultural and Applied Economics Association.
    13. Harutyunyan, Artur & Janda, Karel, 2022. "Multinationals and Sustainable Attitude to Nutrition and Eating Habits," EconStor Preprints 261282, ZBW - Leibniz Information Centre for Economics.
    14. Baker, Scott R. & Johnson, Stephanie & Kueng, Lorenz, 2024. "Financial returns to household inventory management," Journal of Financial Economics, Elsevier, vol. 151(C).
    15. Takanori Adachi & Noriaki Matsushima, 2014. "The Welfare Effects Of Third-Degree Price Discrimination In A Differentiated Oligopoly," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1231-1244, July.
    16. Jie Bai, 2016. "Melons as Lemons: Asymmetric Information, Consumer Learning and Seller Reputation," Natural Field Experiments 00540, The Field Experiments Website.
    17. Ray, Sourav & Snir, Avichai & Levy, Daniel, 2023. "Retail Pricing Format and Rigidity of Regular Prices," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-1.
    18. Takanori Adachi & Takeshi Ebina, 2016. "Log-linear demand systems with differentiated products are inconsistent with the representative consumer approach," Economics Bulletin, AccessEcon, vol. 36(1), pages 260-267.
    19. Nano Barahona & Cristóbal Otero & Sebastián Otero, 2023. "Equilibrium Effects of Food Labeling Policies," Econometrica, Econometric Society, vol. 91(3), pages 839-868, May.
    20. Maceira, Daniel & Palacios, Alfredo & Espinola, Natalia & Mejía, Raúl, 2018. "Demand Price Elasticity and Taxes on the Consumption of Sugar Sweetened Beverages in Argentina," MPRA Paper 102485, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ajagec:v:106:y:2024:i:2:p:967-981. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1467-8276 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.