Alcohol policy harmonization and trade liberalization in the Nordic countries

Pasi Holm
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Pasi Holm: Government Institute for Economic Research

Finnish Economic Papers, 1995, vol. 8, issue 1, 17-24

Abstract: In this paper, a partial equilibrium analysis is used to evaluate consequences of a partial alcohol policy harmonization and a trade liberalization in the Nordic countries. The former will reduce alcoholic beverage taxes and the latter will increase imports of alcoholic beverages. The effects on welfare contributed by the alcohol sector depend on three factors: firstly, whether the import restriction is implemented through quota or voluntary import restriction set by the EU; secondly, how a public monopoly producing an externality generating commodity behaves, i.e. is a public firm e.g. welfare or profit maximizer?; and thirdlY, whether alcohol taxation in the EU is higher or lower than its Pigovian level in the Nordic countries.

Date: 1995
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