Discussion Papers no. 507

Sin takes no border

Driven to drink

This paper investigates household purchasing behavior in response to differing alcohol and tobacco taxes near an international border. Our study suggests that large tax differentials near borders induce economically important tax avoidance behavior that may limit a government's ability to raise revenue and potentially undermine the pursuit of important health and social policy goals. We match novel supermarket scanner and consumer expenditure data to measure the size and scope of the effect for households and stores. We find that stores near/far from the international border have statistically significantly lower/higher sales of beer and tobacco than comparable stores far/near the border. Moreover, we find that households near the border report higher consumption of these same goods. This is consistent with households facing lower prices. Finally, we find measures of externalities associated with the consumption of alcohol and tobacco are higher near the border.

Om publikasjonen

Tittel

Driven to drink. Sin takes no border

Ansvarlige

Timothy K.M. Beatty, Dag Einar Sommervoll, Erling Røed Larsen

Serie og -nummer

Discussion Papers no. 507

Utgiver

Statistics Norway

Emne

Discussion Papers

Antall sider

28

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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