Alcohol, Tobacco, and Crime Reduction

This assignment examines the relationship between alcohol and tobacco markets, exploring how factors like taxation and market shortages influence consumer behavior. It analyzes the impact of cigarette taxes on beer demand due to their complementary nature, as well as the effect of a yeast shortage in the beer market on cigarette purchases. Finally, it presents a case study of Isle of Man's successful crime reduction strategy through implementing a smoking ban in prisons.

Running head: ALCOHOL AND TOBACO MARKET
Alcohol and Tobacco Market
Name of the Student
Name of the University
Author note

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Table of Contents
Introduction......................................................................................................................................2
Alcohol and Tobacco market...........................................................................................................2
Alcohol market............................................................................................................................2
Tobacco Market...........................................................................................................................3
Impact of health warnings on cigarette packaging on beer demand................................................4
Effect of Yeast shortage on Cigarette purchase...............................................................................5
Cigarette ban and crime rate............................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
In today’s world, consumption of tobacco and Alcoholic product is growing globally.
These products badly affect the health of civilian. In concern to this, government considers
increase in the tax rates on cigarette and alcohol. Present paper describes the incidence of
different types of alcohol products and Cigarette consumption in United States. Alcoholic items
and cigarette are often considered as complementary product. In United State, beer is found to be
more closely related with cigarette. United State takes attempts to reduce smoking by increasing
tax rate on cigarette. Apart from than cigarette is ban in the prison of Isle of Man to reduce crime
rate in the state.
Alcohol and Tobacco market
Alcohol market
In the Alcohol market in United State, three widely consumed drinks are Beer, Wine and
Spirit.
Beer
Demand for beer is ahead of Wine and Spirit market. People in America spend a
considerable amount in beer retail stores. In the composition of beer, the level of alcohol is least.
This is one of the reasons for having a large share in beverage market. There are microbreweries
and macro breweries in the market (Siegel et al., 2015). In the beer market, there is competition
among different beer brands.

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Wine
Wine market in United State is globally one of the largest markets. Demand for Wine is
growing day by day. In addition to domestic production, a significant volume is imported to
fulfill domestic demand. Previously Wine is mostly used in occasions. Now, people increase
their demand for Wine. Some dominating brands in Wine market are Treasury Wine Estates,
Constellation Brands, Bronco Wine Company and Gallo Wine Company (statista.com, 2017).
Tobacco Market
Cigarette
The cigarette market is quite large in USA as like the alcohol market. There are different
types of cigarette available in the market. Some of these are Regular Cigarette, Cigar; a new
variety is e-cigarette. US government increases tax on cigarette items (Anderson & Nelgen,
2015). Therefore, to maintain sales volume, seller brings changes in selling strategies and
introduces newer products.
Alcohol and tobacco items both are addictive in nature. More often people consume both
cigarette and alcohol at the same time. This intensifies addiction. A complementary relation
exists between alcohol and cigarette. This is supported by the report published in the article. In
an attempt to reduce smoking, when US government increases tax rate then obvious impact is a
decrease in cigarette demand. This however also brings a reduction is beer demand
(washingtonpost.com, 2017). The inverse relation between price of cigarette and beer demand
indicates that the products are complementary.

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Impact of health warnings on cigarette packaging on beer demand
Figure 1: health warning on cigarette packaging and beer market
(Source: as created by the Author)
Cigarette is harmful for health. Suppose the government orders to give health warning on
each cigarette packet. This might impacts on cigarette purchase by reducing the demand for
cigarette. Same as when tax on cigarette reduces cigarette demand as well as beer demand health
warning will impact on beer demand in the same way (Subbaraman, 2016). Figure 1 above
depicts the picture of beer market. The initial demand curve is DD which now shift leftward and
becomes dd. The likely impact of this a decline in both price and demand in the beer market.

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Effect of Yeast shortage on Cigarette purchase
Figure 2: effect of yeast shortage and cigarette purchase
(Source: As created by Author)
A supply shortage in yeast creates a supply shortage in the beer market as yeast is used in
making beer. From the normal supply demand framework in the market, supply shortage lead to
a price increases in beer market resulting in a decrease in demand (Fine, 2016). When beer
demand reduces then purchase of cigarette will also reduce as many people smokes at times of
drinking beer. Same as above the cigarette demand curve will shift inward from its original
position and consequently price and quantity in the market reduced.
Cigarette ban and crime rate
The addiction of smoking is more common than drinking. Consuming tobacco is less
costly than drinking wine or beer. The demand for any addictive has less inelasticity. People

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generally do not want to leave this habit. Once get addicted people even involve in crime
activities to support their addiction. One way to reduce smoking and resulted crime is to increase
price of cigarette by taxation. However, taxation is not very effective way to reduce crime rate.
(Walters, 2013). Isle of Man designs a different strategy to reduce crime rate in the region. The
strategy is to ban smoking in the prison.
Once people do any crime and sent to the prison they are compelled to leave smoking.
Smoking is completely ban in this prison. It is seen that the policy effectively reduces crime rate
by almost 14% (dailymail.co.uk, 2017). The fear that once criminals get imprisoned they are not
allowed to smoke anymore stops them to do any crime for a mere reason. Smoking is strictly
prohibited in the prison building. All those who stay in the building such as inmates, guards have
to give up smoking along with other convicts. The crime rate is already low in this area because
of a considerably low unemployment rate. The smoking ban in prison further reduces the crime
rate.
Leaving any kind of addiction is not an easy task. Realizing the difficulty supplements to
cigarette is provided. Proper counseling is undertaken for the convicts to help them to completely
get rid of smoking.
Conclusion
The report presents insight of alcohol and tobacco market in United State. Increased tax
on cigarette reduces cigarette purchase and reduces demand for beer. This suggests
complementarily between cigarette and beer. Because of the complementary relation a health
warning on cigarette package can have a impact on beer market. Similarly yeast shortage in beer

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market reduces cigarette purchase. Smoking ban in Isle of Man successfully reduces crime crate
in this area.
References
Anderson, K., & Nelgen, S. (2015). Global wine markets, 1961 to 2009: a statistical
compendium (p. 468). University of Adelaide Press.
Drop in crime on Isle of Man attributed to Europe's only non-smoking prison. (2017). Mail
Online. Retrieved 14 September 2017, from http://www.dailymail.co.uk/news/article-
1239209/Drop-crime-Isle-Man-attributed-Europes-non-smoking-prison.html
Facts, U. (2017). Topic: Wine Market. www.statista.com. Retrieved 14 September 2017, from
https://www.statista.com/topics/1541/wine-market
Fine, B. (2016). Microeconomics. University of Chicago Press Economics Books.
Siegel, M., Chen, K., DeJong, W., Naimi, T. S., Ostroff, J., Ross, C. S., & Jernigan, D. H.
(2015). Differences in alcohol brand consumption between underage youth and adults—
United States, 2012. Substance abuse, 36(1), 106-112.
Subbaraman, M. S. (2016). Substitution and Complementarity of Alcohol and Cannabis: A
Review of the Literature. Substance use & misuse, 51(11), 1399-1414.
Walters, G. D. (2013). Drugs, Crime, and Their Relationships. Jones & Bartlett Publishers.
Want people to drink less? Make their cigarettes more expensive. (2017). Washington Post.
Retrieved 14 September 2017, from

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https://www.washingtonpost.com/news/wonk/wp/2014/10/27/want-people-to-drink-less-
make-their-cigarettes-more-expensive/?utm_term=.6a90eaa33261