Market heterogeneity and the distributional incidence of soft-drink taxes: evidence from France

Fabrice Etilé (1, 2) , Sébastien Lecocq (3) , Christine Boizot-Szantai (3)

1 PSE - Paris School of Economics
2 PJSE - Paris Jourdan Sciences Economiques
3 Université Paris-Saclay

Market heterogeneity may affect the distributional incidence of nutritional taxes if households sort by income across markets with different characteristics. We use scanner data to analyse the distributional incidence of the 2012 French soda tax on Exact Price Indices that measure consumer welfare from the price and availability of softdrinks at a local level. While the average pass-through was small-about 45 per cent-, tax incidence was significantly higher in low-income and less-competitive markets. Market heterogeneity ultimately has substantial distributional effects: it accounts for at least 33 per cent of the difference in welfare variation between low-and high-income consumers.

Mots clés: Consumer price index; Market structure; Inequality; Tax incidence; Soft-drink tax; France

Domaines: Economies et finances; Agriculture, économie et politique

Fabrice Etilé, Sébastien Lecocq, Christine Boizot-Szantai. Market heterogeneity and the distributional incidence of soft-drink taxes: evidence from France. European Review of Agricultural Economics, 2021, 48 (4), pp.915 - 939. ⟨10.1093/erae/jbaa025⟩. ⟨hal-03553704⟩