IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v18y2026i3p39-76.html

The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium

Author

Listed:
  • Rossi Abi-Rafeh
  • Pierre Dubois
  • Rachel Griffith
  • Martin O'Connell

Abstract

We develop a dynamic equilibrium model of firm competition to analyze the effects of counterfactual policies, such as taxes and advertising restrictions, on pricing, advertising, consumption, and welfare. Using micro-level data, we estimate how consumer exposure to television commercials influences product choice and model firms' strategic competition over advertising budgets and pricing. We exploit firms' practice of delegating advertising slot decisions to agencies to link consumer-level advertising variation to firms' strategic choices. Our results show that a sugar-sweetened beverage tax reduces advertising, while the additional impact of advertising restrictions is significantly weaker when a tax is already in place.

Suggested Citation

  • Rossi Abi-Rafeh & Pierre Dubois & Rachel Griffith & Martin O'Connell, 2026. "The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium," American Economic Journal: Microeconomics, American Economic Association, vol. 18(3), pages 39-76, August.
    • Handle: RePEc:aea:aejmic:v:18:y:2026:i:3:p:39-76
    DOI: 10.1257/mic.20240380
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/mic.20240380
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://doi.org/10.3886/E237422V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/25695
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/materials/25696
    Download Restriction: no
    File URL: https://libkey.io/10.1257/mic.20240380?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:18:y:2026:i:3:p:39-76. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.