An Economic Analysis of Beverage Size Restrictions

We model the potential efficiency and distributional consequences of a government beverage-size restriction that is designed to curb or reduce consumption of sugar-sweetened beverages. Unsurprisingly, we find that a credibly implemented restriction can curb consumption, particularly by “high-type” consumers who consume large amounts of sweetened beverages. Surprisingly, we find that for small to moderate restrictions that might be consistent with the magnitude of the NYC soda-ban, consumer welfare will be unaffected by the regulation. Instead, most consumption inefficiency induced welfare losses will be borne by sellers. Thus, policy debates concerning welfare losses from soft-drink sales should focus on business losses rather than consumer welfare losses.

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Conference Paper/ Presentation
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JEL Codes:
D04; D18; D82; I18
Soda, softdrinks, sugary beverages, sugar sweetened beverages

 Record created 2017-04-01, last modified 2018-01-23

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