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

Author

Listed:
  • Rossi Abi Rafeh

    (Unknown)

  • Pierre Dubois

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Rachel Griffith

    (Unknown)

  • Martin O'Connell

    (Unknown)

Abstract

We develop a dynamic equilibrium model of rm 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 rms' dynamic competition through their choice of advertising budgets and product prices, and exploit rms' practice of delegating decisions over advertising slots to agencies to link the rich consumer-level advertising variation with rms' strategic choice variables. We show that a sugar- sweetened beverage tax leads to a reduction in advertising and that the incremental eects of implementing advertising restrictions are substantially reduced with a tax in place.

Suggested Citation

  • Rossi Abi Rafeh & Pierre Dubois & Rachel Griffith & Martin O'Connell, 2025. "The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium," Working Papers hal-04969796, HAL.
    • Handle: RePEc:hal:wpaper:hal-04969796
    Note: View the original document on HAL open archive server: https://hal.science/hal-04969796v1
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