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Philadelphia’s taxing decision: pros and cons of a “soda tax”

Paul Byrne (School of Business, Washburn University, Topeka, Kansas, USA)
Dmitriy Chulkov (School of Business, Indiana University Kokomo, Kokomo, Indiana, USA)
Dmitri Nizovtsev (School of Business, Washburn University, Topeka, Kansas, USA)

The CASE Journal

ISSN: 1544-9106

Publication date: 30 March 2019

Abstract

Theoretical basis

This descriptive case study applies economic concepts to an issue of public policy, and helps build students’ critical thinking, analytical and quantitative skills. The case addresses a variety of topics typically taught in microeconomics and public economics courses. Topics most prominently represented in the case include elasticity of demand and supply, tax policy, tax incidence and negative externalities. Theoretical basis for each topic is laid out in the discussion section of the instructors’ manual, along with insights from student responses. The core nature of the concepts covered in this case study allows it to be integrated with common economics textbooks.

Research methodology

This descriptive case is based on critical economic analysis of secondary sources.

Case overview/synopsis

This case study focuses on the imposition of the controversial “soda tax” on sweetened beverages in the City of Philadelphia in 2017 and considers the economic lessons that can be learned from Philadelphia’s experience with the tax. The tax was proposed as a way to raise the city’s revenue while reducing obesity. After the tax was enacted, the sales of sweetened beverages declined in the city, but increased outside the city’s borders. The receipts from the tax have been below projections.

Complexity/academic level

Learning outcomes covered by the case are typical for a microeconomics, public economics or managerial economics course. The appropriate course levels range from the principles to the MBA level of the economics and business curriculum. Discussion questions may be selected to fit a specific course focus and level. The instructors’ manual outlines question sets suitable for various types of economics courses.

Keywords

Acknowledgements

Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality.

Citation

Byrne, P., Chulkov, D. and Nizovtsev, D. (2019), "Philadelphia’s taxing decision: pros and cons of a “soda tax”", The CASE Journal, Vol. 15 No. 4, pp. 337-354. https://doi.org/10.1108/TCJ-03-2019-0014

Publisher

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Emerald Publishing Limited

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