Effects of Alcohol Taxation on Prices: A Systematic Review and Meta-Analysis of Pass-Through Rates

Abstract

Abstract This paper conducts the first review and meta-analysis for estimates of alcohol excise tax pass-through rates. A total of 30 empirical studies are examined. Several widely cited studies indicate substantial overshifting, suggesting imperfectly-competitive markets for alcohol. The narrative review provides insights for data coverage by country; econometric models; and results for under- or overshifting by beverage. Weighted-averages calculated for two samples show that beer taxes are overshifted and wine-spirits taxes are fully shifted. Meta-regressions corrected for publication bias indicate, however, that full-shifting cannot be rejected for any beverage. Results are useful for alcohol tax policy and future research on optimal taxation and incidence.