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Communication dans un congrès

Sugar policy reform, tax policy and price transmission in the soft drink industry

Abstract : There is growing interest in evaluating the impact of price variations in agricultural commodities on food prices and consumption. Food industries typically consist of large firms that benefit from market power and price transmission along the chain is affected by this imperfectly competitive environment. In this paper, we propose an empirical analysis of the impact of a reform of the EU sugar policy on the soft drink industry. The reform produces a significant decrease in the price of sugar. We consider how the manufacturers and the retailers both strategically react to this change in the production cost of soft drinks. Using a structural econometric model, we first estimate the consumer substitution patterns and the models for the vertical relationships between the soft drink industry and the retail industry. After selecting the “best” model for vertical relationships, we simulate the impact of the sugar policy reform. We show that the retail prices decrease more than the marginal production costs. Our results thus suggest that the assumption of passive pricing by the industry leads to a poor estimate of the impact of an upstream cost shock. We also simulate the impact of a recently enacted excise tax on soft drinks. Because of strategic pricing, this tax is likely to lead to an increase of approximately 10% in prices thereby decreasing the soft drink consumption by more than 3 liters per person per year.
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Communication dans un congrès
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https://hal.inrae.fr/hal-02810448
Déposant : Migration Prodinra <>
Soumis le : samedi 6 juin 2020 - 08:27:43
Dernière modification le : mercredi 5 août 2020 - 03:08:21

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  • HAL Id : hal-02810448, version 1
  • PRODINRA : 169028

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Céline Bonnet, Vincent Requillart. Sugar policy reform, tax policy and price transmission in the soft drink industry. Research seminar at the Dusseldorf Institute for Competition economics, Heinrich-Heine-Universität Düsseldorf [Düsseldorf]. Düsseldorf Institute for Competition Economics, Düsseldorf, DEU., Apr 2012, Dusseldorf, Germany. 31 p. ⟨hal-02810448⟩

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