Alcohol taxes vs. preventative measures: A theoretical note
Date
2008
Authors
Black P.
Journal Title
Journal ISSN
Volume Title
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Abstract
The paper assumes that damages in the form of deaths and traumatic injuries caused by alcohol-related road accidents constitute a significant part of the negative externalities associated with alcohol consumption. It then compares the conventional Pigouvian solution with the impact that a sufficiently high penalty on drunken driving and better law enforcement may have. It is hypothesised that these measures may cause heavy drinkers either to cut back on their consumption of alcohol on occasions when they have to drive a vehicle or to maintain their consumption levels but refrain from driving. The welfare losses are much lower for each of these scenarios and are also carried specifically by those responsible for the negative externality. An attempt is also made to consider how individuals may respond to higher penalties and/or a more effective law enforcement system. © Journal compilation © 2008 The Economic Society of South Africa.
Description
Keywords
accident, economic theory, law enforcement, tax system, theoretical study
Citation
South African Journal of Economics
76
4
76
4