Sin taxes in differentiated product oligopoly: an application to the butter and margarine market [report]

Lars Nesheim, Martin O'Connell, Rachel Griffith
2010 unpublished
There is policy interest in using tax to change food purchasing behaviour. The literature has not accounted for the oligopolistic structure of the industry. In oligopoly the impact of taxes depend on preferences, and how ...rms pass tax onto prices. We consider a tax on saturated fat. Using transaction level data we ...nd that the form of tax and ...rms'strategic behaviour are important determinants of the impact. Our results suggest that an excise tax is more e¢ cient than an ad valorem tax at
more » ... reducing saturated fat purchases and an ad valorem tax is more e¢ cient at raising revenue. JEL: L13, H20, I18
doi:10.1920/wp.cem.2010.3710 fatcat:u6ng65yfgfgvpicchq27zsf4ym