Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252100 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9583
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper provides a new foundation of soft drink taxation. We abstract from externalities and internalities previously used to justify such taxation and, instead, emphasize that neither explicit nor implicit markets and prices for sugar content can be expected to emerge. Hence, in the absence of any regulation, the sugar content of sugar-sweetened beverages (SSBs) would be inefficiently high. This market failure can be corrected by a tax on the sugar content per unit of the SSB. However, a sugar content tax alone leads to an unintended downward distortion of the quantity of SSBs, which has to be corrected by an additional revenue-neutral subsidy on each unit of the SSB.
Subjects: 
obesity
sugar-sweetened beverages
sugar content
sugar content tax
soft drink subsidy
JEL: 
D50
H21
I18
Document Type: 
Working Paper
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