http://www.bbc.co.uk/news/health-20515918 describes a proposal to put a minimum price on the retail price of a unit of alcohol in Great Britain. A study estimates that setting the minimum @ 45 p would reduce consumption by 4.3%. Also see http://www.huffingtonpost.co.uk/2012/11/28/theresa-may-to-announce-m_n_2202231.htmland http://www.marketplace.org/topics/world/british-government-wants-booze-price-hike.
A colleague wonders why GB is thinking about setting a minimum price instead of imposing or increasing a tax. Using higher taxes will also reduce the quantity demanded and would have the additional benefit of generating tax revenue. Using a minimum price has the advantage of targeting cheap alcohol, the consumption of which imposes more externalities than sipping brandy.
elasticity, externalities, price controls
No comments:
Post a Comment