Minimum Price Of Alcohol Essay

The article is about having implemented a minimum price on alcohol. It is visible that this policy has reduced drink related crimes such as sexual assault and drink driving. This is because the consumption of alcohol creates negative externalities. This includes things such as liver diseases and obesity. Crimes perpetrated against people, fell by 9.17% when increasing the price on alcohol of 10%. The evidence found concluded that introducing a minimum price on alcohol yielded major benefits before David Cameron abandoned the idea.
The article suggests that placing a minimum price on alcohol could reduce crimes: “It appears that minimum pricing is a powerful tool for reducing alcohol-related harm at the individual and societal level,” A negative
It is not taking into account the negative externalities of consumption such as liver diseases therefore the Marginal Social Benefit (MSB) is less than the Marginal Private Benefit (MPB). Due to the consumption, alcohol is being overproduced and provided therefore it is in a state of market failure and carries a dead weight welfare loss because the market for alcohol is in a position of allocative efficiency. The Government has intervened with a minimum price floor so that the consumption of alcohol is reduced so that MSB=MPB. The equilibrium for price and quantity is Qe and Pe on the diagram below. As the article mentioned, they have added a price floor of 10% to the purchasing of any alcoholic beverages. P1 therefore represents the minimum price floor that the British Columbian government imposes. The government has illegalised the purchasing of any price below the line of P1. Therefore as the price has increased, quantity demanded has decreased from Qe to Qd1. However quantity supplied of alcohol has now increased from Qe to Qs because production has become more profitable. This results in a surplus/excess supply of