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Liberalization of the market for alcohol: Evidence from a Canadian province

Author

Listed:
  • Didier Tatoutchoup

    (Université de Moncton, Canada)

  • Octave Keutiben

    (Université de Moncton, Canada)

Abstract

We estimate demand and cost functions to determine the optimal policy to regulate the alcohol industry. Interestingly, we show that marginal and average costs may not be constant, as generally assumed in the literature on alcohol industry. A key policy implication from our estimates is that state monopoly is not necessarily the only means, let alone the best, both for maximizing revenue and reducing the social costs of alcohol consumption. Indeed, optimal taxation in a liberalized competitive market can yield a higher net social benefit. We also provide additional elasticities information on alcohol products.

Suggested Citation

  • Didier Tatoutchoup & Octave Keutiben, 2020. "Liberalization of the market for alcohol: Evidence from a Canadian province," Economics Bulletin, AccessEcon, vol. 40(1), pages 782-800.
    • Handle: RePEc:ebl:ecbull:eb-19-01077
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    State monopoly; liberalization; optimal taxation; alcohol sales;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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