It’s not just taxes that affect prices. The UK has long debated imposing a minumum price for alcohol. The articles below give an excellent overview of the issues in this context.
Consider these questions:
- Explain the market failure here. What evidence can you use to support your view?
- Can you draw a diagram to represent the market failure?
- How would a minimum price work? Draw a diagram to illustrate the theory.
- What are the limitations of this method of price intervention?
- Are there alternatives or complementary strategies that could be used?
Some further reading:
http://www.bbc.co.uk/news/uk-wales-30352183
http://www.theguardian.com/society/2014/feb/10/minimum-alcohol-pricing-save-860-lives-study
http://www.theguardian.com/society/2015/jun/28/minimum-alcohol-pricing-cuts-serious-crime-canada
http://www.theguardian.com/news/datablog/2012/mar/23/alcohol-minimum-price-supermarket
Guide to Units:
Econormics 