Data and code for: Optimal sin taxation and market power

Replication code for Optimal sin taxation and market power. Paper abstract: We study how market power impacts the efficiency and redistributive properties of sin taxation, with an empirical application to sugar-sweetened beverage taxation. We estimate a detailed equilibrium model of the UK drinks market, which we embed in a tax design framework to solve for optimal sugar-sweetened beverage tax policy. Positive price-cost margins on drinks create inefficiencies, which act to lower the optimal rate compared with a perfectly competitive setting. However, since profits mainly accrue to the rich, this is partially mitigated under social preferences for equity. Overall, ignoring market power when setting the optimal sugar-sweetened beverage tax rate leads to welfare gains that are 40% below those at the optimum.