The Economics of Minimum Pricing for Alcohol
16 Pages Posted: 7 Jun 2013
Date Written: June 2013
This article explores a wide range of issues that proponents of setting minimum prices for alcohol must resolve before they can safely claim their proposals improve public health and decrease public health care costs. Problems range from inability to know ‘correct’ prices and why tacking on pricing regulations to markets already taxed makes sense, to various unintended adverse consequences such as generating higher demand for illegal drugs and alcohol. It also remains unclear why advocates would not prefer to raise taxes since this is the typical method that economists propose to correct markets in which harm spills over to innocent parties.
Keywords: alcohol, externalities, public health, regulation, taxation
JEL Classification: I18, H2
Suggested Citation: Suggested Citation