Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 412 - 432 |
| Number of pages | 21 |
| Journal | Australian Journal of Agricultural and Resource Economics |
| Volume | 59 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2015 |
Cite this
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Disaggregated econometric estimation of consumer demand response by alcoholic beverage types. / Srivastava, Pratima Devi; McLaren, Keith Robert; Wohlgenant, Michael Kurt; Zhao, Xueyan.
In: Australian Journal of Agricultural and Resource Economics, Vol. 59, No. 3, 2015, p. 412 - 432.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - Disaggregated econometric estimation of consumer demand response by alcoholic beverage types
AU - Srivastava, Pratima Devi
AU - McLaren, Keith Robert
AU - Wohlgenant, Michael Kurt
AU - Zhao, Xueyan
PY - 2015
Y1 - 2015
N2 - The paper presents estimates of price elasticities of demand for 12 disaggregated alcoholic beverages in Australia: premium beer, full strength beer, low alcohol beer and mid-strength beer; red bottled wine, white bottled wine, sparkling wine, cask wine; dark and light ready-to-drink (RTD); and dark and light spirits. These disaggregated categories correspond closely to the commodities of interest to public policymakers with respect to taxation and health policies. The system of demand equations is estimated with Nielsen s data using a semiflexible Almost Ideal Demand System model in order to impose negative semi-definiteness on the demand parameters. Results indicate elastic own-price elasticities for virtually all commodities. Cross-price elasticities suggest that beverages most linked with negative externalities, namely full strength beer, dark RTD and dark spirits, may need to be taxed jointly. Any proposed tax increase to cask wine may also result in consumers shifting demand to more undesirable beverages. The elasticity estimates are used to illustrate the effect of a hypothetical change towards taxation equalisation based on alcohol content. These elasticities offer crucially needed inputs for analysing any tax change policies.
AB - The paper presents estimates of price elasticities of demand for 12 disaggregated alcoholic beverages in Australia: premium beer, full strength beer, low alcohol beer and mid-strength beer; red bottled wine, white bottled wine, sparkling wine, cask wine; dark and light ready-to-drink (RTD); and dark and light spirits. These disaggregated categories correspond closely to the commodities of interest to public policymakers with respect to taxation and health policies. The system of demand equations is estimated with Nielsen s data using a semiflexible Almost Ideal Demand System model in order to impose negative semi-definiteness on the demand parameters. Results indicate elastic own-price elasticities for virtually all commodities. Cross-price elasticities suggest that beverages most linked with negative externalities, namely full strength beer, dark RTD and dark spirits, may need to be taxed jointly. Any proposed tax increase to cask wine may also result in consumers shifting demand to more undesirable beverages. The elasticity estimates are used to illustrate the effect of a hypothetical change towards taxation equalisation based on alcohol content. These elasticities offer crucially needed inputs for analysing any tax change policies.
U2 - 10.1111/1467-8489.12095
DO - 10.1111/1467-8489.12095
M3 - Article
VL - 59
SP - 412
EP - 432
JO - Australian Journal of Agricultural and Resource Economics
JF - Australian Journal of Agricultural and Resource Economics
SN - 1364-985X
IS - 3
ER -