Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192489 
Year of Publication: 
2007
Series/Report no.: 
Discussion Papers No. 507
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
This paper investigates household purchasing behavior in response to differing alcohol and tobacco taxes near an international border. Our study suggests that large tax differentials near borders induce economically important tax avoidance behavior that may limit a government's ability to raise revenue and potentially undermine the pursuit of important health and social policy goals. We match novel supermarket scanner and consumer expenditure data to measure the size and scope of the effect for households and stores. We find that stores near/far from the international border have statistically significantly lower/higher sales of beer and tobacco than comparable stores far/near the border. Moreover, we find that households near the border report higher consumption of these same goods. This is consistent with households facing lower prices. Finally, we find measures of externalities associated with the consumption of alcohol and tobacco are higher near the border.
Subjects: 
Alcohol Consumption
Tobacco Consumption
Border Trade
Taxation
JEL: 
C31
F14
I18
Document Type: 
Working Paper

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