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The Effect of Sunday Sales Bans and Excise Taxes on Drinking and Cross–Border Shopping for Alcoholic Beverages

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  • Stehr, Mark

Abstract

State excise taxes and Sunday sales bans are important interventions in the markets for beer and spirits. This paper estimates the effect of these policies on within–state and cross–state purchases of beer and spirits for 50 states plus the District of Columbia over the period 1990–2004. The results indicate that while demand for both spirits and beer appears to be quite price elastic, 20 to 40 percent of the elasticity for spirits is due to displacement of sales across state borders rather than decreases in own–state drinking. The paper also finds that although repeal of a Sunday sales ban leads to an increase in the sale of spirits, much of the increase in sales of beer is due to a continuation of pre–existing trends in those states that repealed their bans. Approximately 80 percent of the increase in sales of spirits that results from repealing a Sunday ban on spirits is due to an increase in own–state drinking, while the remaining 20 percent is due to changes in cross–border shopping.

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  • Stehr, Mark, 2007. "The Effect of Sunday Sales Bans and Excise Taxes on Drinking and Cross–Border Shopping for Alcoholic Beverages," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(1), pages 85-105, March.
    • Handle: RePEc:ntj:journl:v:60:y:2007:i:1:p:85-105
    DOI: 10.17310/ntj.2007.1.05
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    1. Kenkel, Donald S, 1996. "New Estimates of the Optimal Tax on Alcohol," Economic Inquiry, Western Economic Association International, vol. 34(2), pages 296-319, April.
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    Cited by:

    1. Christopher Carpenter & Carlos Dobkin, 2010. "Alcohol Regulation and Crime," NBER Chapters, in: Controlling Crime: Strategies and Tradeoffs, pages 291-329, National Bureau of Economic Research, Inc.
    2. Hinnosaar, Marit, 2016. "Time inconsistency and alcohol sales restrictions," European Economic Review, Elsevier, vol. 87(C), pages 108-131.
    3. Asatryan, Zareh & Gomtsyan, David, 2020. "The incidence of VAT evasion," ZEW Discussion Papers 20-027, ZEW - Leibniz Centre for European Economic Research.
    4. Lesley Chiou & Erich Muehlegger, 2014. "Consumer Response to Cigarette Excise Tax Changes," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(3), pages 621-650, September.
    5. Avdic, Daniel & von Hinke, Stephanie, 2021. "Extending alcohol retailers’ opening hours: Evidence from Sweden," European Economic Review, Elsevier, vol. 138(C).
    6. Thomas Y. Mathä & Alessandro Porpiglia & Michael Ziegelmeyer, 2017. "Cross-border commuting and consuming: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 49(20), pages 2011-2026, April.
    7. DeCicca, Philip & Kenkel, Donald & Liu, Feng, 2013. "Excise tax avoidance: The case of state cigarette taxes," Journal of Health Economics, Elsevier, vol. 32(6), pages 1130-1141.
    8. B. Douglas Bernheim & Jonathan Meer & Neva K. Novarro, 2012. "Do Consumers Exploit Precommitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption," NBER Working Papers 17762, National Bureau of Economic Research, Inc.
    9. repec:mea:meawpa:14284 is not listed on IDEAS
    10. Goel, Rajeev K. & Payne, James E. & Saunoris, James W., 2016. "Spillovers from the beer market to U.S. cigarette demand," Economic Modelling, Elsevier, vol. 55(C), pages 292-297.
    11. Vinish Shrestha & Sara Markowitz, 2016. "The Pass-Through Of Beer Taxes To Prices: Evidence From State And Federal Tax Changes," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1946-1962, October.
    12. Chiou Lesley & Muehlegger Erich, 2008. "Crossing the Line: Direct Estimation of Cross-Border Cigarette Sales and the Effect on Tax Revenue," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-41, December.
    13. Barrie M. Craven & Michael L. Marlow & Alden F. Shiers, 2013. "The Economics of Minimum Pricing for Alcohol," Economic Affairs, Wiley Blackwell, vol. 33(2), pages 174-189, June.
    14. Cohen, Alex & Keiser, David A., 2017. "The effectiveness of incomplete and overlapping pollution regulation: Evidence from bans on phosphate in automatic dishwasher detergent," Journal of Public Economics, Elsevier, vol. 150(C), pages 53-74.
    15. B. Douglas Bernheim & Jonathan Meer & Neva K. Novarro, 2016. "Do Consumers Exploit Commitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 41-69, November.
    16. Jungtaek Lee & Baris K. Yörük, 2014. "Does Legalization of Sunday Alcohol Sales Increase Crime?," CESifo Working Paper Series 5065, CESifo.
    17. Beatty, Timothy K.M. & Larsen, Erling Røed & Sommervoll, Dag Einar, 2009. "Driven to drink: Sin taxes near a border," Journal of Health Economics, Elsevier, vol. 28(6), pages 1175-1184, December.
    18. Julie L. Hotchkiss & Yanling Qi, 2017. "Impact of Allowing Sunday Alcohol Sales in Georgia on Employment and Hours," Southern Economic Journal, John Wiley & Sons, vol. 84(2), pages 504-524, October.
    19. Colin Peter Green & Bruce Philip Hollingsworth & Maria Navarro Paniagua, 2015. "Longer opening hours, alcohol consumption and health," Working Papers 100181794, Lancaster University Management School, Economics Department.
    20. Lovenheim, Michael F. & Slemrod, Joel, 2010. "The fatal toll of driving to drink: The effect of minimum legal drinking age evasion on traffic fatalities," Journal of Health Economics, Elsevier, vol. 29(1), pages 62-77, January.
    21. Chiou, Lesley & Muehlegger, Erich, 2008. "Crossing the Line: The Effect of Cross Border Cigarette Sales on State Excise Tax Revenues," Working Paper Series rwp08-012, Harvard University, John F. Kennedy School of Government.
    22. Heaton, Paul, 2012. "Sunday liquor laws and crime," Journal of Public Economics, Elsevier, vol. 96(1), pages 42-52.
    23. Nelson Jon P. & Moran John R., 2020. "Effects of Alcohol Taxation on Prices: A Systematic Review and Meta-Analysis of Pass-Through Rates," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-21, January.
    24. Ce Shang & Anh Ngo & Frank J. Chaloupka, 2020. "The pass-through of alcohol excise taxes to prices in OECD countries," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(6), pages 855-867, August.

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