Document Detail

Alcohol prices, beverage quality, and the demand for alcohol: quality substitutions and price elasticities.
MedLine Citation:
PMID:  16433736     Owner:  NLM     Status:  MEDLINE    
BACKGROUND: Although the published literature on alcohol beverage taxes, prices, sales, and related problems treats alcoholic beverages as a simple good, alcohol is a complex good composed of different beverage types (i.e., beer, wine, and spirits) and quality brands (e.g., high-, medium-, and low-quality beers). As a complex good, consumers may make substitutions between purchases of different beverage types and brands in response to price increases. For this reason, the availability of a broad range of beverage prices provides opportunities for consumers to mitigate the effects of average price increases through quality substitutions; a change in beverage choice in response to price increases to maintain consumption. METHODS: Using Swedish price and sales data provided by Systembolaget for the years 1984 through 1994, this study assessed the relationships between alcohol beverage prices, beverage quality, and alcohol sales. The study examined price effects on alcohol consumption using seemingly unrelated regression equations to model the impacts of price increases within 9 empirically defined quality classes across beverage types. The models enabled statistical assessments of both own-price and cross-price effects between types and classes. RESULTS: The results of these analyses showed that consumers respond to price increases by altering their total consumption and by varying their brand choices. Significant reductions in sales were observed in response to price increases, but these effects were mitigated by significant substitutions between quality classes. CONCLUSIONS: The findings suggest that the net impacts of purposeful price policy to reduce consumption will depend on how such policies affect the range of prices across beverage brands.
Paul J Gruenewald; William R Ponicki; Harold D Holder; Anders Romelsjö
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Publication Detail:
Type:  Journal Article; Research Support, N.I.H., Extramural; Research Support, Non-U.S. Gov't    
Journal Detail:
Title:  Alcoholism, clinical and experimental research     Volume:  30     ISSN:  0145-6008     ISO Abbreviation:  Alcohol. Clin. Exp. Res.     Publication Date:  2006 Jan 
Date Detail:
Created Date:  2006-01-25     Completed Date:  2006-05-17     Revised Date:  2007-11-14    
Medline Journal Info:
Nlm Unique ID:  7707242     Medline TA:  Alcohol Clin Exp Res     Country:  United States    
Other Details:
Languages:  eng     Pagination:  96-105     Citation Subset:  IM    
Prevention Research Center, Berkeley, CA 94704, USA.
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MeSH Terms
Alcohol Drinking / economics,  prevention & control
Alcoholic Beverages / economics*,  standards,  supply & distribution
Choice Behavior*
Commerce / economics*
Economic Competition / economics
Socioeconomic Factors
Taxes / economics*
Grant Support

From MEDLINE®/PubMed®, a database of the U.S. National Library of Medicine

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