Effects of Container Size on Overconsumption of Carbonated Soft Drinks

We take a structural approach to examine the effects of larger container size on consumption of carbonated soft drinks---using Nielsen Company's Homescan data on household purchases for the years 2004 through 2006. Our results show that by removing the price discount implicit in packages with larger container size, the average unit price the two households pay for CSD products increase and hence both households (both the low income and the high income) reduce their annual consumption of soft drinks by about 75%. This reduction is due to a combination of reduced number of purchases and switching to products with less number of bottles/cans.