Impact of Excise Taxes on Alcohol Consumption: A Case Study Analysis

This case study delves into the effects of government-imposed excise taxes on alcohol consumption, examining the interplay between price elasticity of demand and market structures. It explores how increased taxes influence consumer behavior, particularly among young adults, and analyzes the implications of these policies within various economic models, including monopolistic competition, oligopoly, and duopoly markets. The study also investigates the relationship between excise taxes and alcohol-related problems such as accidents and health issues, and it assesses the effectiveness of taxation as a public health measure. Furthermore, it discusses the features of different market structures, providing examples and analyzing the behavior of firms within these frameworks. The analysis includes long-term equilibrium in monopolistic competition and the characteristics of oligopolistic markets, along with the concepts of natural duopoly and market demand and cost curves.

Case study

Table of Contents
INTRODUCTION.......................................................................................................................3
TASK..........................................................................................................................................3
Q.1.(1.1) Government reduces prices consumption by considering higher excise taxes on
alcohol products take information by price elasticity of demand on alcohol.............................3
BOOZING BY YOUNGSTERS AND ADULTS......................................................................4
(1.2)Relative collate of skyrocketing excise taxes compared to impressive a minimal
deserving of alcohol product for reducing alcohol ingestion......................................................5
2.1. Under the state of noncompetitive competition long-term worth of a table........................6
2.2.what are the features of oligopolistic market with example.................................................7
REFERENCES:.........................................................................................................................10

INTRODUCTION.
This case study is based on Government reduces prices consumption by considering
higher excise taxes on alcohol products take information by price elasticity of demand on
alcohol. It may effect the market because those who consume alcohol-related products many
accidents will cause due to drinking and driving,so many crime will held by consuming alcohol
and people do violence, cirrhosis of the liver and many other diseases which which is not good
for health(Elder, and et. al 2010).
TASK.
Q.1.(1.1) Government reduces prices consumption by considering higher excise taxes on alcohol
products take information by price elasticity of demand on alcohol.
If government apply higher taxes on the alcohol products it will surely effect on the
demand for alcohol products by higher prices. Macroeconomic expert inspect the effect on
alcohol products amount and wine consumption. Macroeconomic expert had research that many
problems will be raise by consumption of alcohol many people will abuse others, many accidents
will cause due to drinking and driving,so many crime will held by consuming alcohol and people
do violence, cirrhosis of the liver and many other diseases which which is not good for health,
reduced learning achievement, Various survey have centred on risky people, such as younsters

and the person who are working in educational institution. In the investigation, we use various
information or verifiable formulation, we find that when the amount of liqour product is cut
down then it will surely effect on heavy boozing utilisation or maltreatment(Andreyeva, Long,
& Brownell, (2010)).
Detection accompanies probably the foremost cardinal law of economic science that of the
declivitous demand curve. This law states that because the worth of a product will increase, the
number demanded of that product drop. Given this law, policies that increase the costs of alcohol
product are often effectual in reduction the health, economical, and social sequel ensuing from
alcohol exercise and abuse.A short assessment of the assortment of argumentation which will
impact the costs of alcohol product. The assessment is followed by a language of the wide and
growing economic science literature examining the impact of worth on alcohol use, significant
intemperateness, and also the results of alcohol use and abuse, with a particular stress on studies
targeted on children and adults(Sacks, G., Veerman, Moodie, & Swinburn, (2011)).
BOOZING BY YOUNGSTERS AND ADULTS
The alcohol-related economic investigating considers alcohol consumption by all section of the
group. Nevertheless, it is important to focus on the price sensitivity of youngsters and adult
heavy drinking because the relative incidence of alcohol-related problems, specially drinking and
driving, is excessive advanced among these age groups. Deadly car clang area unit the leading
explanation for decease of individuals below the age of thirty, and alcohol is concerned in
additional than common fraction of those fatal crashes. The ages of 17 and 25 were much than
double as large as those of people ages 26 and above. The higher rate of people who do maltreat
the ages of 19 and 30. Accordingly, plan of action to edge alcohol abuse by youngsters and
adults might be the most effectual way to edge it in each section of the population(Sharma,
Vandenberg, & Hollingsworth, (2014)).

Impact of excise tax on supply and demand of alcohol.
(1.2)Relative collate of skyrocketing excise taxes compared to impressive a minimal deserving
of alcohol product for reducing alcohol ingestion.
Alcohol consumption is among the very best three risk half for worldwide illness burden,
disability-adjusted life years lost, by smoking cigarettes and high level increasing the price of
alcohol to devour, through with government analysis and tax policies, has been effectual in
reduction general consumption inside the population, tax of great drinking and frequency of
alcohol-related hurt.
Data reviews propose that a public health-orientated alcohol valuation and taxation system is one
that may increase all-time low value at that alcohol product is acquire,revenue enhancement
smart on a meter basis, with the aim of discourage initiation into drinking and acknowledge that
among actual drinkers it is the assembly of alcohol consumed on single occasions and over time
that extends health risks. A motive for our survey is precise new debates in varied countries

around the world, with reference to the desirableness of the many analysis and tax policies for
alcohol.
A new individualistic panel assessment of the alcohol levy system, licensed by the council of
Australia, justice it to be confused or taught leading reforms therefore every alcohol product got
to be taxed on a meter basis, that over quantity of some time got to meet to a charge per unit,
with a low-alcohol beginning acquaint for all alcohol product. Tax is to boot a relative policy
that to be implement. As we have a tendency to area unit able to see by the review an identical
price of taxation crosswise all alcohol-related product is that the smallest amount associate
degreealysable and extra expeditious approach of distinguish an alcohol tax. consumers who
adore alcohol responsibly medium drinkers might to give unnecessarily they have to pay taxes
and high price on the alcohol beverages. National policies can impact alcohol products prices in
many terms. Another one is country,State and localised governments obtrude excise duties on
alcohol products. An excise duties is supported on the amount of alcohol products acquisition in
comparison of sales tax, which is supported on the purchased of alcohol related
products( Yurekli, & Fong, (2012)).
2.1. Under the state of noncompetitive competition long-term worth of a table.
Monopolistic competition it is economical market model in which there are many sellers
and many buyers. But there is not specific product. Demand curve of monopolistic competition is
elastic because there are several companies who sell differentiated products. Their are many
substitutes of those company. If the company rise the price of the product than customer will
switch to the other product.Demand isn't absolutely elastic as a result of a noncompetitive
competition has less rivals then would be the case for excellent competition,because the
merchandise area unit distinguished to many degree, in order that they aren't excellent
substitutes(Xu, & Chaloupka, (2011)).

In Long run equilibrium the competitive companies in an organisation will earn the
profit. Their are so many companies who started their business with loss. We can take a long run
price of table is above $200 in which in the monopolistic competition there are several
companies who sold their products differentiated from the other companies if they sell their
product at lower price and the quality of a product must be good then the customer will not
switch to the other brand.
2.2.what are the features of oligopolistic market with example.
Oligopoly could be a market structure within which a compact variety of firms has the massive
variety of market share. associate degree marketplace is said to a monopoly, demur that instead
than one company, 2 or additional company rule the market. there's no dead high limit to the
amount of firms in associate degree marketplace, however the quantity should be debased
adequate that the act of 1 company significantly result and influence the others(Sushko, I. (Ed.).
(2013)).
Features of oligopolistic competition.
 Interdependency-The companies below market area unit mutualist in production call.
they're mutualist as a result of the amount of competition is fewer and any modification

in value & product etc. by associate firms can have a right away crucial on the possibility
of its rivals, that successively revenge by ever-changing their value and output.
 Value of publicity and selling costs-The firms underneath oligopolistic market use
assertive and anti-aircraft arm to extend a larger share within the marketplace and to take
advantage of sale. visible of this firms have to be compelled to receive a good trade on
publicity and totally different measures of sale promotion.
 cluster behaviour-Another essential characteristic of market is that the analysis of cluster
behaviour. just in case of good competition, monopoly and noncompetitive competition,
the business area unit assumptive to act in such a way on increase their profits. The
increasing behaviour on his portion might not be binding.
 Indefiniteness of demand curve-These options is that the undeviating outcome of the
mutuality diagnostic of associate oligopolistic firms. Correlative reciprocality creates
quality for all the businesses. No firms will foretell the result of its price-output policy.
 Components of monopoly-Some elements of monopoly below oligopolistic state.
underneath market with product differentiation every firms controls an enormous a
portion of the market by manufacturing distinguished product. In so much a case it acts
in its domain as a monopoliser in protective covering monetary value and production.
BILLABONG,COLES and FRANKLINS are the oligopolistic industries in Australia. They have
large amount of share in the market. They deal with their customer very well. They are well
renowned in the market,Customer will trust on them. The quality of product they provide it was
much better then the other brand. That's the reason customer will not switch to the other brand.
2.3.what are the features of monopolistic market with example.
A monopolistic market is a abstractive concept in which only one organisation may
offering products and services to the public. This is the alternate of a absolutely competitive
market, in which an boundless number of companies operate. In a strictly monopolistic model,
the monopoly companies is able to curtail product, raise prices and bask super-normal profits in
the long run.
Characteristic of noncompetitive competition.
 Huge no of vendor-There square measure many numbers of firms marketing intimately
connected, however not consistent product. every firms acts severally and incorporates a

restricted share of the market. So, a private firms has restricted management over the
market value. sizable amount of firms results in competition within the market.
 Outcome divergence-Each firms is during a place to exercise some extent of monopoly in
malice of huge variety of sellers through product differentiation. Product differentiation
refers to tell apart the product on the idea of brand name, size, colour, shape, etc. the
merchandise of a firms is shut, however not good substitute of alternative firms.
CANVA,ELFIN CARS,FOSTERS are the 3 companies who do monopoly in the market have
large no of sellers who sell their products to the large no of customers. They have product
differentiation they are slightly different from the other companies. Lack of good information the
customer and merchant don't have good information of the market. They have less
mobility(Fanti, L., & Gori, L. (2012)).
2.4.what is natural duopoly and explain the market demand curve and cost curve.
A duopoly could be a state during which 2 firms own all or nearly all of the marketplace
for a given product or service. A duopoly is that the most elementary kind of market market
dominated by atiny low variety of firms. A duopoly will have identical impact on the market as a
monopoly if the 2 players interact on costs or output. Collusion leads to customers paying higher
costs than they might in an exceedingly actually competitive market(Ferrett, B., & Wooton, I.
(2010)).
Here are 2 gracious of duopolies. within the 1st, the duopoly, rivalry between the 2 corporations
is supported on the amount of merchandise equipped. The duopoly associate primarily comply
with divided the marketplace. the worth every company acquire for the merchandise relies on the
amount of things created, and also the 2 establishment react to every other's production alteration
till associate degree equilibrium is achieved.
In a Bertrand duopoly, the 2 corporations contend on monetary value. as a result of devour can
purchase the cut-rate of 2 indistinguishable merchandise, this results in a zero-profit value
because the 2 competition plan to attract additional shoppers and so additional profit through
value cuts. The threat of value material implies that Bertrand equilibrium costs and profits ar
principally lower and quantities over in duopolies(Wang, Wang, & Zhao, (2012)).

REFERENCES:
BOOKS AND JOURNAL
Elder, R. W., and et. al & Task Force on Community Preventive Services. (2010). The
effectiveness of tax policy interventions for reducing excessive alcohol consumption and related
harms. American journal of preventive medicine, 38(2), 217-229.
Andreyeva, T., Long, M. W., & Brownell, K. D. (2010). The impact of food prices on
consumption: a systematic review of research on the price elasticity of demand for food.
American journal of public health, 100(2), 216-222.Chaloupka, F. J., Yurekli, A., & Fong, G. T.
(2012). Tobacco taxes as a tobacco control strategy. Tobacco control, 21(2), 172-180.
Xu, X., & Chaloupka, F. J. (2011). The effects of prices on alcohol use and its consequences.
Alcohol research and health, 34(2), 236.
Sacks, G., Veerman, J. L., Moodie, M., & Swinburn, B. (2011). ‘Traffic-light’nutrition labelling
and ‘junk-food’tax: a modelled comparison of cost-effectiveness for obesity prevention.
International Journal of Obesity, 35(7), 1001-1009.

Sharma, A., Vandenberg, B., & Hollingsworth, B. (2014). Minimum pricing of alcohol versus
volumetric taxation: which policy will reduce heavy consumption without adversely affecting
light and moderate consumers?. PLoS One, 9(1), e80936.
Sushko, I. (Ed.). (2013). Oligopoly dynamics: Models and tools. Springer Science & Business
Media.
Fanti, L., & Gori, L. (2012). The dynamics of a differentiated duopoly with quantity competition.
Economic Modelling, 29(2), 421-427.
Ferrett, B., & Wooton, I. (2010). Competing for a duopoly: international trade and tax
competition. Canadian Journal of Economics/Revue canadienne d'économique, 43(3), 776-794.
Wang, L. F., Wang, Y. C., & Zhao, L. (2012). Tariff Policy and Welfare in an International
Duopoly with Consumer‐Friendly Initiative. Bulletin of Economic Research, 64(1), 56-64.