Price is a key determinant for access to and consumption of alcoholic beverages. Alcohol prices are determined by a range of factors and the most prominent factors are levels of taxation (excise duties and value added tax). Taxation is a key lever and blunt tool for governments to influence...

We show that tax-induced increases in alcohol prices can lead to substantial substitution and avoidance behavior that limits reductions in alcohol consumption. Causal estimates are derived from a natural experiment in Illinois where spirits and wine taxes were raised sharply and unexpectedly in...