In the News
Think tank urges increase price of alcohol in supermarkets.
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?