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Government Failure - Indian Alcohol Ban Drives Unregulated Liquor

Graham Watson

31st January 2023

Proof that banning goods that produce negative externalities is rarely constructive.

In this case, the government of Bihar banned alcohol consumption in the state, driving its production and consumption underground, and exposing the population to the far graver danger of unregulated 'country' liquor and denying the government tax revenues.

It's a terribly sad tale, but, as most economists would recognise, all too predictable.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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