Partial versus General Equilibrium Calorie and Revenue Effects Associated with a Sugar-Sweetened Beverage Tax

• Main Authors: Senarath Dharmasena, George Davis, Oral Jr. Capps
• Format: Article
• Language: English
• Published: Western Agricultural Economics Association 2014-08-01
• Series: Journal of Agricultural and Resource Economics
• Subjects: calorie effects; general equilibrium model; partial equilibrium model; revenue effects; sugar-sweetened beverage tax
• Online Access: https://ageconsearch.umn.edu/record/186559

Taxes on sugar-sweetened beverages have been widely proposed to combat the U.S. obesity crisis. Most previous work has found the effects of a SSB tax to be small to moderate. We address three limitations. First, we incorporate the supply side via a stochastic equilibrium displacement model. Second, we account for uncertainty elasticities using probability distributions associated with elasticities. Third, we address industry revenue effects. We find that assumptions about the supply side are more important than assumptions about substitution. ignoring supply side severely overestimates quantity and calorie effects and slightly underestimated revenue effects.