Case Study Of Systembolaget

Public Opinion
According to Opinionsindex, OPI, 76% of the Swedish population support Systembolaget and its right to being the only sole seller of alcohol (“Så sager folket”). According to a research report conducted in December 2014 by SIFO Research International, 74% of the participants agreed that Systembolaget should retain its right to sell strong beers, wines and spirits (Hallberg, Joh, and Esa Österberg).
Using data collected from my survey (See Appendix A) conducted on 25 people aged between under 18 to 30 and above in Gothenburg, it is evident that alcohol is an inelastic good as 88% said they would keep buying alcohol even if the prices rose. This proves that as the price rises, the quantity demanded for the demerit good, alcohol,
A monopoly mainly abuses its power in terms of setting prices that are too high for consumers. Other than anti-consumer behavior, a monopoly can also peruse predatory pricing to eliminate existing competition, however, this does not apply to this research as Systembolaget has the right to be the sole seller of alcoholic beverages. In addition, a monopoly can impose vertical restraints where it enforces prices and limitations on its suppliers or retailers. However, this does not apply to Systembolaget as it is its own retailer and it is the suppliers who set the price for Systembolaget (“Abuse of Monopoly Power”).
If found guilty of abuse of monopoly power, the government can impose regulation and legislation, and also pursue nationalization. In this case, the entire market for alcohol in Sweden was nationalized in 1955 to limit the negative externalities that arose from drinking alcohol, which all came under the name of Systembolaget. In general, a nationalized or government owned monopoly ensure that prices are lower and that the output is larger for the consumer. However, the Swedish government ensures that the prices are higher, and with a large selection of alcoholic beverages to still suit the Swedish population. It is believed that Systembolaget is abusing its power by charging higher prices for the products to generate a higher government revenue. On the other hand, my research has shown that the reason for these high prices is to
According to the above graph, Systembolaget’s net profit (profit after tax) has been steadily decreasing after 2008 with a few anomalies such as 2013 and 2016. Given that the consumption of alcohol in Sweden has decreased over the years, it can be expected that Systembolaget’s profits will also decrease. The outcomes above support the idea that Systembolaget does not have their main objective as maximizing profits like most companies do. They don’t create advertisements to increase their sales or make people buy more than they originally intended, but to inform about the negatives of alcohol consumption.
Instead of maximizing their profits, Systembolaget aims for corporate social responsibility. They have a socio-political objective, which focuses on limiting the consumption of alcohol. They also focus on:
• Good working conditions in the supply chain
• Environmental improvements in the supply chain
• Climate