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Quasi‐Experimental Price Elasticity of Liquor Demand in the United States: 1960–83
Author(s) -
Baltagi Badi H.,
Goel Rajeev K.
Publication year - 1990
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242348
Subject(s) - price elasticity of demand , elasticity (physics) , economics , border effect , econometrics , microeconomics , agricultural economics , international economics , materials science , composite material
This paper uses sixty‐five recent tax changes on liquor in private licensed states over the period 1960–83 to update Simon's quasi‐experimental price elasticity of liquor. Three alternative measures for liquor price are used, and the sensitivity of this price elasticity to border effect purchases as well as market changes over time are examined. Our results support a liquor price elasticity estimate of −.7. However, the confidence interval on this estimate is wide. Border effect purchases as well as changes in the liquor market over time are statistically insignificant.