Tagged: elasticity

Quality matters: alcohol edition - The Dismal Science

Eric Crampton Aug 23, 2017

I’ve noted John Gibson’s work showing that standard demand estimation techniques overestimate the price elasticity of demand for sugary drinks, and consequently overestimate the effects of soda taxes. Gibson shows that, because most empirical work uses household expenditure on the product category divided by some measure of average price, that work bunches together consumer shifts along both quality and quantity … Read More

Inelastic demand - The Dismal Science

Eric Crampton Apr 09, 2013

Gorbachev's crackdown on alcoholism reduced heavy drinking in the former Soviet Union. He combined some measures directly targeting heavy drinkers with price increases and supply reductions. Bhattacharya and coauthors wrote: The results suggest little evidence that our summary measure of campaign intensity operates either through differential supply shifts or through differential price increases. However, we are hesitant to draw conclusions … Read More