Scandinavian Working Papers in Economics

HUI Working Papers,
HUI Research

No 115: The impact of price changes on volume sales of alcoholic beverages in Sweden, 2006–2013

Per Hortlund () and Oana Mihaescu ()
Additional contact information
Per Hortlund: HUI Research, Postal: SE-10329 Stockholm, Sweden
Oana Mihaescu: HUI Research, Postal: SE-10329 Stockholm, Sweden,

Abstract: We evaluate whether price elasticities on registered alcohol have changed in the last ten years in Sweden, in particular with regard to the investigation by Asplund et al (2007). We also investigate the fiscal effects of such changes. According to our estimates, price elasticities have increased, and these increases may have substantial effects on estimated changes in tax revenues when commodity tax rates are changed. In particular, commodity tax rates on spirits may have reached “Laffer territory” where tax increases may actually lower tax revenues.

Keywords: law of one price; optimal taxation; cross-border shopping; laffer curve; alcohol

JEL-codes: F15; H21; R12

20 pages, January 3, 2016

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