Monday, August 17, 2015

Berkeley soda tax raised price less than 1-for-1

Cawley and Frisvold compare soda prices in Berkeley and San Francisco before and after the new soda tax took effect in Berkeley. They find that Berkeley prices rose by less than half of the new tax, and they discuss a variety of reasons why that may have happened. Particularly interesting was the concomitant response of (same-brand?) diet soda prices, which could have been a response to shifted demand but is worrisome for a policy that tries to make calories more expensive.