Demand and distance: Evidence on cross-border shopping

Asplund, Marcus; Friberg, Richard; Wilander, Fredrik

doi:10.1016/j.jpubeco.2006.05.006

Cited by 121 publications

(89 citation statements)

References 19 publications

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“…He examines both the sale of tobacco and consumption of tobacco at the state level and uses differences between these to infer tax avoidance when there are changes in state-level taxes. Stehr finds, over the period 1986-2001, tax avoidance accounted for almost 10% of sales over the period 1986-2001. Our paper is perhaps closest in spirit to recent work by Asplund et al (2007) who consider crossborder shopping for of alcohol between Sweden and Denmark. They estimate a demand model for alcoholic beverages in Sweden that incorporates both domestic and foreign prices.…”

Section: Introductionmentioning

confidence: 52%

“…Moreover, they find that the effect of the border extends a great distance into Sweden. Our analysis echoes Asplund et al (2007) but differs with respect to methodology, focus, and scope. First, rather than explicitly estimating a demand relationship, we use a more intuitive matching regression approach, comparing stores near the border and stores far from the border.…”

Section: Introductionmentioning

confidence: 91%

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Driven to drink: Sin taxes near a border

Beatty

Larsen

Sommervoll

2009

Journal of Health Economics

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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.

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Section: Introductionmentioning

confidence: 52%

Section: Introductionmentioning

confidence: 91%

Driven to drink: Sin taxes near a border

Beatty

Larsen

Sommervoll

2009

Journal of Health Economics

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“…This is likely to be an extreme example, but even in cases where individuals have to cross national borders, the extent of cross-country shopping may be substantial. In a study that is closely linked to our paper, Asplund et al (2007) estimate the elasticity of sales in the Swedish government alcohol retail monopoly with respect to Danish alcohol prices. This elasticity is around 0.3 in the border region and decreases to 0.2 when moving 150 km inland.…”

Section: Previous Literaturementioning

confidence: 99%

“…That the sales reacted so strongly is actually not that surprising given the comparisons of prices of alcohol between Finland and Sweden. Figure 3 plots the price indices of spirits in Sweden and Finland taking the Swedish price in January 1999 as the reference value following Asplund et al (2007). The variation in the Finnish price prior to March 2004 is mainly due to exchange rate variation.…”

Section: Alcohol Salesmentioning

confidence: 99%

Cross-border health and productivity effects of alcohol policies

Johansson¹,

Pekkarinen²,

Verho³

2014

Journal of Health Economics

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This paper studies the cross-border health and productivity effects of alcohol taxes. We estimate the effect of a large cut in the Finnish alcohol tax on mortality, alcohol related illnesses and work absenteeism in Sweden. This tax cut led to large differences in the prices of alcoholic beverages between these two countries and to a considerable increase in cross-border shopping. The effect is identified using differences-indifferences strategy where changes in these outcomes in regions near the Finnish border are compared to changes in other parts of northern Sweden. We use register data where micro level data on deaths, hospitalisations and absenteeism is merged to population-wide micro data on demographics and labour market outcomes. Our results on the effect of the Finnish tax cut on mortality alcohol-related hospitalisations in Sweden are very imprecise. However, we find that workplace absenteeism increased by 5% for males and by 13% for females near the Finnish border as a result of the tax cut.

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“…Thus, the regional distribution of the four subcategories cannot be quantified. As most of the unrecorded alcohol consumption is in countries such as India, China, Brazil, Russia or in the African continent, category 3, including mainly cross-border shopping, is clearly not very relevant on a global level, but it may still constitute a sizeable portion in some parts of the world, such as the Nordic countries [8]. More important, however, are questions about whether there are substantial effects from unrecorded consumption on public health over and above the effect of ethanol alone.…”

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confidence: 99%

Unrecorded alcohol: a threat to public health?

LACHENMEIER,

REHM

2009

Addiction

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Headlines such as this [1] appear in newspapers with certain regularity, more often than not referring to incidences and outbreaks in low-and middle-income parts of the world. These incendiary statements also often refer to death or fatal consequences through the usage of so-called 'unrecorded alcohol'. Unrecorded alcohol is a summary term for a number of categories not registered in the country where it was consumed. Four main categories can be distinguished (see [2], their Figure 1):i Illegally produced or smuggled alcohol products (including illegal homemade alcohol). ii Surrogate alcohol: non-beverage alcohol products not intended officially for human consumption, such as industrial alcohol, mouthwash or eau de cologne [3]. iii Alcohol products that are recorded, but not in the jurisdiction of consumption (e.g. cross-border shopping). iv Legal but unrecorded alcohol products (homemade or other).In 2000 30% of global alcohol consumption was estimated to be unrecorded [4,5], with a high proportion in low-income countries and in the former Soviet Union. These estimates, based usually upon expert opinion or surveys [6], carry substantial uncertainty [5][6][7] and have many open questions. Thus, the regional distribution of the four subcategories cannot be quantified. As most of the unrecorded alcohol consumption is in countries such as India, China, Brazil, Russia or in the African continent, category 3, including mainly cross-border shopping, is clearly not very relevant on a global level, but it may still constitute a sizeable portion in some parts of the world, such as the Nordic countries [8]. More important, however, are questions about whether there are substantial effects from unrecorded consumption on public health over and above the effect of ethanol alone. Table 1 shows an overview of potential components which could pose a public health threat, and the level of evidence. In considering this issue two main questions arise: (1) what is the evidence on causality for the links to health; and (2) what is the prevalence of additional harmful components in unrecorded alcohol around the world? POTENTIAL COMPONENTS OF UNRECORDED CONSUMPTION WHICH COULD POSE A PUBLIC HEALTH THREATTo date, neither of the questions has been answered conclusively. While it is beyond the scope of an editorial to review systematically the level of evidence by component, we will give some illustrations of the underlying problems using the example of a recent publication [9]. THE POLITICAL DIMENSION: THE INTERESTS OF THE ALCOHOL INDUSTRYGiven the global level of unrecorded consumption it is obvious that the alcohol industry, with the exception of cross-border trading or some minor categories, has a keen interest in its reduction. Thus, it is no surprise that the International Center for Alcohol Policies (ICAP), a notfor-profit organization funded by leading producers of beverage alcohol, has published repeatedly on unrecorded consumption and potential health problems [10]. In their most recent publication, Noncommercial Alcohol in Thr...

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Demand and distance: Evidence on cross-border shopping

Cited by 121 publications

References 19 publications

Driven to drink: Sin taxes near a border

Driven to drink: Sin taxes near a border

Cross-border health and productivity effects of alcohol policies

Unrecorded alcohol: a threat to public health?

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