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Think tank urges increase price of alcohol in supermarkets.

Graham Watson

13th September 2019

This piece of Social Market Foundation research suggests that increasing taxes on supermarket alcohol would be a good way of creating a level playing field for pubs.

Further, they argue that having higher taxes on high-strength alcohol would also have additional public health benefits.

However, is this good economics? It strikes me as a second best solution. The real cause of a lower price of alcohol in supermarkets is their bargaining power, and the use of alcohol as a loss leader, and taxation seems to be a blunt instrument to tackle this problem. Can you think of other unintended consequences that might arise?

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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