The effects of taxation on the individual consumption of sugar-sweetened beverages.

To assess the impact of taxation on the consumption of sugar-sweetened beverages (SSBs) most economic studies using household data consider the average consumer. Individual consumption is, however, very heterogeneous. In this paper, we propose a three-step methodology to evaluate the impact of SSB taxation on individual consumption. First, we use a disaggregation method to recover individual consumption from observed household consumption. Second, we estimate the demand for different categories of households. Finally, we simulate the impact of a tax policy on individual consumption. We find a high level of heterogeneity in consumption. Adults, both men and women, consume a greater quantity of SSBs than children. More importantly, for any given age category, the average consumption of SSBs increases with body mass index (BMI). Among heavy consumers of SSBs, obese and overweight people are over-represented. In France, a €0.20/l tax on SSBs might decrease sugar intake by more than 2 kg per year on average and by more than 5 kg, roughly 3 teaspoons/day, for 5% of the adult population. Moreover, overweight and obese men and women, who correspond to 41% of the adult population, represent 56% of the last five percentiles of the distribution of the variation in sugar intake. This is a key result because the objective of taxation is to decrease the consumption of individuals who are more at risk, that is those who are overweight and obese. We also show that classical method of the assessment of tax policies based on per-capita consumption underestimate the effect of the tax for obese adults by 9%. Finally, we estimate that a €0.20/l tax on SSBs might avoid about 640 deaths (about 1.6% of the considered diseases) as a consequence of the decrease in SSB consumption.

Mergers with Differentiated Products: Where Do We Stand?

On the occasion of the 10th anniversary of the 2010 U.S. Horizontal Merger Guidelines, this article provides an overview of the state of economic analysis of unilateral effects in mergers with differentiated products. Drawing on our experience with merger enforcement in Europe, we discuss both static and dynamic competition, with a special emphasis on the calibration of competitive effects. We also discuss the role of market shares and structural presumptions in differentiated product markets.

How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry.

Japan has experienced several appreciation episodes. These appreciations may squeeze profit margins and lower export volumes. This paper investigates whether firms can weather appreciation periods by producing differentiated rather than commoditized products. To do this it investigates different sectors within the Japanese transportation equipment industry. Results from estimating pricing-to-market (PTM) coefficients indicate that firms producing differentiated products can pass-through more of exchange rate appreciations into higher foreign currency prices and thus better preserve their profit margins. Results from estimating trade elasticities are consistent with the PTM results and indicate that the automobile industry has exported much less than predicted after the yen depreciated in 2012. Finally, estimates of the stock market exposure across sectors indicates that the profitability of firms producing differentiated products is less exposed to appreciations. Producing differentiated, knowledge-intensive goods can thus help firms to survive endaka periods.

Mandatory labels, taxes and market forces: An empirical evaluation of fat policies.

The public-health community views mandatory Front-of-Pack (FOP) nutrition labels and nutritional taxes as promising tools to control the growth of food-related chronic diseases. This paper uses household scanner data to propose an ex-ante evaluation and comparison of these two policy options for the fromage blanc and dessert yogurt market. In most markets, labelling is voluntary and firms display fat labels only on the FOP of low-fat products to target consumers who do not want to eat fat. We here separately identify consumer preferences for fat and for FOP fat labels by exploiting an exogenous difference in legal labelling requirements between these two product categories. Estimates of demand curves are combined with a supply model of oligopolistic price competition to simulate policies. We find that a feasible ad valorem fat tax dominates a mandatory FOP-label policy from an economic perspective, but both are equally effective in reducing average fat purchases.