Data and Code for: Discrete Prices and the Incidence and Efficiency of Excise Taxes

Resource Type
Dataset : event/transaction data, program source code
  • Conlon, Christopher (NYU Stern)
  • Rao, Nirupama (Univeristy of Michigan, Ross School of Business)
Publication Date
Free Keywords
Excise Tax; Incidence; Market power; Price Adjustment; Nominal Rigidities
  • Abstract

    This paper uses UPC-level data to examine the relationship between excise taxes, retail prices, and consumer welfare in the distilled spirits market. We document a nominal rigidity in retail prices that arises because firms largely choose prices that end in ninety-nine cents and change prices in whole-dollar increments. A correctly specified model, like an ordered logit, takes this discreteness into account when predicting the effects of alternative taxes. Explicitly accounting for price points substantially impacts estimates of tax incidence and the excess burden cost of tax revenue. Meaningful non-monotonicities in these quantities expand the potential considerations in setting excise taxes.
Temporal Coverage
  • 2007-07-01 / 2013-07-31
    Time Period: Sun Jul 01 00:00:00 EDT 2007--Wed Jul 31 00:00:00 EDT 2013
  • 2013-07-01 / 2013-08-31
    Collection Date(s): Mon Jul 01 00:00:00 EDT 2013--Sat Aug 31 00:00:00 EDT 2013 (Summer 2013)
Geographic Coverage
  • United States (Connecticut, Louisiana, Illinois)
Sampled Universe
Wholesale Alcohol Prices for Connecticut.
Collection Mode
  • The Connecticut Wholesale Prices were scraped by the authors and assembled from public filings from the Department of Consumer Protection.

This study is freely available to the general public via web download.
  • Is version of
    DOI: 10.3886/E117326
  • Conlon, Christopher, and Nirupama Rao. “Discrete Prices and the Incidence and Efficiency of Excise Taxes.” American Economic Journal: Economic Policy, n.d.

Update Metadata: 2020-10-26 | Issue Number: 1 | Registration Date: 2020-10-26