Mar 10 2009

Negative externalities of consumption: Britain’s “inebriated hooligans”

Some Britons Too Unruly for Resorts in Europe – NYTimes.com

According to the article above, Great Britain exports more trouble to the rest of Europe than any other nation.

A recent report published by the British Foreign Office, “British Behavior Abroad,” noted that in a 12-month period in 2006 and 2007, 602 Britons were hospitalized and 28 raped in Greece, and that 1,591 died in Spain and 2,032 were arrested there.The report did not distinguish between medical cases and arrests associated with drunkenness and those that had nothing to do with it. But it did say that “many arrests are due to behavior caused by excessive drinking.”

The unruly behavior of Britons does not always end when the vacation is over, either:

Earlier this summer, flying home to Manchester from the Greek island of Kos, a pair of drunken women yelling “I need some fresh air” attacked the flight attendants with a vodka bottle and tried to wrestle the airplane’s emergency door open at 30,000 feet. The plane diverted hastily to Frankfurt, and the women were arrested.

How is this story related to economics, you may be wondering? Well, it’s really about a market failure. The over-consumption of alcohol by British tourists is creating spillover costs for the societies (and police forces) of the nations in which the tourists get themselves into trouble.

As governments often do when market failures exists, some British consulates have begun taking action to reduce the negative externatlities associated with their nationals’ drunkenness.

Worried about the increase in crimes and accidents afflicting drunken tourists, the British consulate in Athens has begun several campaigns, using posters, beach balls and coasters with snappy slogans, to encourage young visitors to drink responsibly.

“When things do go wrong, they go wrong in quite a big way,” said Alison Beckett, the director of consular services. “What we’re trying to do here is reduce some of these avoidable accidents where they have so much to drink that they fall off balconies and are either killed or need huge operations.”

Because British tourists only consider their own enjoyment (benefits) while on vacation, they consume alcohol at a level that fails to take into account the social costs of their behavior. In economic terms, the marginal private benefit of alcohol consumption exceeds the marginal social benefit, representing an overallocation of resources towards alcohol in tourist towns. Government action by British consulates is aimed at reducing demand (marginal private benefit) among tourists, shifting the MPB curve back towards the MSB curve, in the hope  that alcohol consumption will decline to the socially optimal level, where marginal social benefit equals marginal social cost.

There seems to be a fine line between too much drinking and not enough in the tourist spots of Europe. As far as the impact that British drunkenness has on business, some in the tourist trade believe the very prospect of wild parties and cheap booze is what keep the local economies afloat. Crack down too much on the wild Britons, and business could collapse as customers attracted to the anarchy stop arriving.

Discussion questions:

  1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
  2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
  3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

298 responses so far

298 Responses to “Negative externalities of consumption: Britain’s “inebriated hooligans””

  1. Horia Stanescuon 27 Aug 2008 at 5:52 am

    A very interesting article and a nice way to tie in youth culture with economics mechanics. There's no reason not to judge alcoholic beverages and the consumption of alcoholic beverages as a market failure. This market failure type can be classified as a Moral Hazard. In other words, the individual is not provided incentive to take socially efficient preventive measures. The incentive is provided, however, for the person in question to go on such booze-trips by cheap airlines and the minimal costs of the actual purchase of the alochol (four drinks and two shots for $8, less than one pint in London). Because this is the only method of intoxication which is protected by law, individuals are provided a great incentive to exploit this to its limits. Of course, the cultural factor must not be forgotten: British drinking culture is a very deep-rooted and praised amongst its users: try sending a group of 10 twenty-year old Iranians to the same location and see how much they drink after growin up in their own culture.

    If the local governing bodies would want to reduce these number of incidences it would be a very simple matter of altering or creating new legislature and enforcing it (ie. no more than 2 drinks per person in one night, blood-alcohol level limits and random breathaliser tests with scaling penalties etc.) or the introduction of a indirect tax or that of a minimum price for the selling of alcoholic beverages. However, this would impact other turistic businesses so greatly, it would effectively ruin the economy of the region as there are no other businesses people can easily shift into in Crete.

    This does mean, however, that there is an unfair distribution of taxpayer's money across the nation. A large pub owner will have both the requirement and availability of government-provided services a much larger proportion of time than a rural family in Crete. The bar and pub proprietors will thus be able to rely on the police and medical services at no cost to be there to serve his customers if the need would arive. There already are over 20 officers placed on a 1000 foot long strip. This means that if you were to walk 15 meters in either direction you would be faced by a police officer. Comparing this to police activity in a village in the middle of Crete, we would see why this is an unfair (but not unnecessary) distribution of goods. As such, the private cost to run such a bar or pub in no way reflects the social costs. Not only are people more at risk of violent crime and disturbances from these hooligans, but the public resources which could become critical in a different location on the same island are being spent to supervise the big-spenders making trouble in turistical locations.

  2. Joelon 27 Aug 2008 at 6:51 am

    I would agree that alcohol consumption could be classed as a form of market failure. To be specific, it is a negative externality in consumption. This means that a good, such as alcohol, is being overconsumed below the social optimum, and is causing negative spillovers in consumption, such as widespread drunkenness, crime, and in the worst cases death due to overconsumption.

    One economic action which the government could take would be to levy a high tax on alcohol, directly proportional to the externality or the social cost. This would provide a financial disincentive for the consumption of alcohol. If we were to argue that alcohol is price inelastic, the burden of the tax should lie principally on the consumer, in this case young British partygoers. As opposed to legislation, this measure would be fully enforcible. However, to evaluate this measure in greater depth, if the tax would indeed be effective and would successfully decrease demand, then local business could suffer. Lower demand for alcohol would mean less revenue.

    However, in my view, this measure would fully justified in relation to question 3. Tourist businesses are profiting at the expense of the taxpayer, and the private cost of running these does not reflect the sometimes horrific social costs. For instance, the government has to pay for advertising campaigns to lower demand, and for healthcare (which is "free" in Spain, and state sponsored) whose resources are taken up by drunken Brits. A tax would provide the government with extra revenue, compensating the budget for the expenses incurred by inhebriated Brits. As for the businesses who would be hit by the tax, their private costs would merely reflect the social cost. Consumers would buy less alcohol, and therefore the existence of the negative externality ie. the drunkenness would decrease.

    Bottom line: Alcohol is too cheap. Brits are getting too drunk. Tax it.

  3. Alex Telfordon 27 Aug 2008 at 7:02 am

    The British misbehaving while on holiday is not a new thing, several years ago they were voted "the worlds worst tourists" coming bottom on on scale which took rudeness, meanness, behaviour, adventurousness and language skills into account.

    Like horia, I would say that over consumption of alcohol is an example of market failure, as the social costs associated with the consumption of alcohol are large, leading to tens of thousands of preventable deaths yearly and contributing significantly to health problems in chronic drinkers.

    If tourist nations were serious about reducing alcohol consumption they would have several available options; negative advertising as mentioned in the article is one option, but a more effective option which was mentioned by Horia would probably be to introduce an indirect tax onto alcohol, raising the price significantly could make the cost of more than two or three drinks per night prohibitively expensive to most holiday goers, and noticeably lowering consumption as a result. Although raising the cost of alcohol could have a very negative effect on the tourism industry, it is likely that an important reason for traveling abroad for some tourists would be cheap alcohol and nightclubs. It is very possible that raising prices would dissuade tourists with less disposable income from traveling, and therefore substantially cutting down service industry profits during the vital tourist season. Even if the price of alcohol was increased it is likely that they would be driven down again as other tourist locations lowered prices in order to draw in customers. I believe the best options for controlling the problem would either be extensive negative advertising campaigns, or severe fines and penalties for those caught breaking laws while under the influence of alcohol, these could act to reduce the incidence of heavy drinking related issues by providing a disincentive to overindulge without causing a rise in alcohol prices and scaring away consumers as a result.

    I would imagine that running a bar in a location like Greece would not be very expensive, and during tourist season bars, nightclubs and restaurants can be fully loaded with foreign customers and the potential for massive profits are high. Although, however cheap it may be to run a bar in Greece, the additional social costs not covered by the bars expenses can be very high. Accidents, arrests, damage to property etc. is common in such areas, causing a disproportionate amount of tax money to be spent in areas that deal with tourists, as police and ambulance squads must be ready for potential mishaps, as horia insightfully mentioned the presence of police officers may be extremely imbalanced. Local residents of the areas swamped by tourists for several months a year may be irritated by their presence, small local businesses could be driven out by the arrival of more popular big chain establishments, turning once diverse areas into homogenized tourist-y resorts and perhaps casting out tradition and culture in the process.

  4. Sean Isaacson 27 Aug 2008 at 7:09 am

    To add to what Joel and Horia have already said, there can be ways in which to cut down on alcohol consumption without too much of an opportunity cost. For example having Hotels specifically designed for people who like to go clubbing, so that they can waddle from the dancefloor to their bedroom floor after a night dancing and drinking. This way the contact with other people is avoided and the externality decreases. Additionally, places where drunken behaviour would be inappropriate (such as family restaurants or public areas) could provide a drink limit, or limit the volume of the spirits they sell, say anything under 15%. Both these methods would still allow for tourism of this type to occur, whilst preventing the negative effects of it from being too extreme.

  5. Joelon 27 Aug 2008 at 6:05 pm

    While I think Sean's idea about drunk-fitted Hotels is an innovative one, it would surely decrease the capacity of hotels, and therfore drive up costs for businesses (as land costs money)

    As for the regulation on spirit levels, I would have to argue that people would simply drink more, and while contributing to business, would still incurr the same social costs.

  6. Matteoon 28 Aug 2008 at 2:40 am

    I do not think there is much to add upon the externalities issues that alcohol consumption creates or I would be simply repeating one more time what said above by the others. Although i have a few comments and suggestion to make. I think Sean's idea is suitable in order to still allow British rude tourists to drink and party, and at the same time not deprive Spain, Greece etc from receiving the income they see entering every year from the huge mass of British tourist that arrive on their beaches,clubs and consumer their alcohol. Although as Joel said this could cause the capacity of hotels to decrease and therefore drive up costs.

    If you ask me, the best idea is an increase of the Police forces and have a review of the laws, or even have the government of these countries make new laws, in order to increase the severity of the punishments for all the crimes related to the behaviour that those tourists have shown. We can take England as an example.

    The huge problems of Hooligans were solved in a similar way in England. By introducing Stewarts, by increasing the organization of police around stadiums, and by the introduction of new laws for those who did not behave on sundays.

    Regulating spirits levels definatly wouldn't work since as Joel said those people would simply drink more.

    If instead a much more organized police force would be on the field, this would allow security to increase, and at the same time increase the states revenues thanks to the money payed in fines by those who still do not respect the law

    This would allow local businesses to keep running smoothly (what would not accour if a high tax on alcohol would be put in place), and at the same time see an overall higher security, wellbeing for the locals, and for the other turists.

  7. Jean Kiekelon 28 Aug 2008 at 4:45 am

    Jason, thank you for posting this site to the AP listserv. I will be directing my students to your articles and analyses. This article and graphic explanation of spillover costs and benefits is something that students should find easy to understand and much better than McConnell's long-winded explanation in the textbook. It will be something that the students should also be able to relate to than some of the examples in the book. Your blog is fantastic.

  8. Wilhelm Nykoppon 28 Aug 2008 at 5:23 am

    I found the article to be pretty interesting, had never thought of drinking being a negative externality in consumption. It is pretty obvious though, having been to a few tourist resorts, and seeing some of the tourists whose aggressive drinking had become a social problem. This was resolved by two hotel employees escorting the inebriated group out. While this in no way solves the problem, it did offer a kind of band-aid solution, moving the social cost away from us, and onto someone else.

    I disagree with Joel's point of taxation on alcohol from first hand experience; Finland implemented a very high tax on not only stronger liquors, but also beer. A poll the following year examining the reduction in alcohol consumption was quite shocking; it had not reduced the amount of alcohol people were drinking by more than a percent or two. Last year, the government reduced the taxation on alcohol again, as the population had gone from purchasing their alcohol from a store to importing it from, for example, Estonia. This meant that their revenue from alcohol had not increased. These two factors combine to show that increasing taxation was truly the opposite of what you stated, as it was ineffective.

    Sean's idea of localizing the damages on the other hand, would work better to reduce the social cost, but not by much. While the tourists would now be isolated to certain locations, violence and such could still occur, but possibly to a smaller extent as they would not "waddle" through someone's private property.

  9. Joelon 31 Aug 2008 at 10:43 pm

    What Wilhelm said is an interesting revelation. He mentions that a tax, bringing up the price of alcohol, brings about a minimal or negligable response in the quantity consumed. I think we can therefore determine that alcohol is Price inelastic.

    However, I would just like to float the idea that there is a possibility that alcohol too could be a giffen good. It is possible that even with a tax levied on it, alcohol still represents a small proportion of people's income. To add to this, the private benefits of consuming alcohol in certain societies may be so high (in England it is simply part of the culture that you go "down the pub with 'yer mates") that an increase in price does not serve as enough of a disincentive to outweigh those private benefits.

    In light of Wilhelm's evidence, I can only propose that the tax be made so high that alcohol becomes a luxury good. However, for any government taking this measure there would undoubtedly be severe political repurcussions (especially in England).

  10. Wilhelm Nykoppon 03 Sep 2008 at 4:30 am

    Joel I really don't think absudly high taxes will work for two reasons:

    1. Prohibition failed

    2. No politician could support it without almost losing their jobs (popular opinion would definately be against it.

    Interesting how politics affect economics, and how they can do the opposite of what many are meant to do; as they stop the market from reaching equilibrium

  11. Ollieon 13 Mar 2009 at 8:08 pm

    I disagree with most of the others on this blog. I do not really believe that British Binge drinking is a failure of our Economic policy. It is a failure of our social policy; English youths literally have nothing better to do than get drunk on street corners and this habit grows and develops into their later lives.

    If taxes were to be put on alcohol or it prohibited all together this would only stimulate the illegal trade of smuggled booze, probably of a worse quality (just look at the moonshine in Russia that sends you blind). It would also without a doubt would send our youths onto harder drugs with worse side effects.

    I don't think regulation or prohibition would lead us anywhere except a higher crime rate. I think more money should instead be invested in social programs such as sports centres.

    As for the drinking abroad, places such as Spain and Greece are usually the holiday destinations of choice for as Mr. Hauet would so poetically put it "Scratty" people.

    Scratty English people and excessive binge drinking leading to crime come hand in hand!

  12. Amiton 13 Jan 2010 at 9:54 pm

    I respectfully disagree with Ollie, Alcohol consumptions is a negative externality of consumption, at times.

    The economics are simple: the inebriated hooligans do not have to pay for the consequences of their actions and thus have a higher marginal benefit than the the marginal social benefit. To fix this would be simple lower the benefit by having hooligans who commit crimes pay a high fine or community hours. Eventually the MPB -> MSB and the problem will cease to exist as there will be a lower number of consumption equal to the socially optimal level.

  13. Jasonon 14 Jan 2010 at 4:17 pm

    2. The resort communities would simply have to raise the Marginal Personal Cost to the drunken tourists for their behavior. Keeping the benefit the same, increasing the MPC would cause the tourists to drink less and get into less trouble. There are several ways to accomplish this. They could raise the prices for drinks to foreigners after a certain time, for example, or tax them somehow per drink. As in Switzerland for the halb-tax card, there could be a similar thing, so that locals could pay a lower price than angry tourists (price discrimination). Another way to raise the MPC would be to increase the punishment as a result of bad behavior (fines). Either way, a rational tourist would drink less, as the intersection of MPC and MPB would be at a lower number of drinks.

  14. Thomason 15 Jan 2010 at 2:50 am

    1. Yes overconsumption is a market failure. It could be classified as public goods failing since it is the polices and the governments responsibility to control behaviour such as this and if tourists are getting away with in on these levels then is it the government that has failed.

    2. To stop tourists from behaving like these the government should stop the tourists from feeling that they will be able to get away with the acts that they are committing.

  15. Gabeon 15 Jan 2010 at 3:23 am

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    – I think for this question I would have to agree with Jason, if they dont want drunk tourists in their towns all they have to do is raise the price by adding tax to the alcohol and if the locals don't want to pay the extra price because there not causing any trouble, then make there be some kind of system making them able to have half-off for a card system. Also if the tourists were aware, as they come into the country, to know that if they are caught for bad behavior because of alcohol would result in serious trouble. And they could do that with advertisement. The consequences would probably make them drink more responsively.

    Gabe

  16. Gelando Makrideson 19 Jan 2010 at 6:56 pm

    1. I believe it is, and it would a market failure due to negative externalities and overallocation of resources towards the alcohol market.

    2. The government could tax alcohol sales in hotel bars, decreasing the incentive to get drunk at hotels. They could also provide government-funded coupons for other local activities which would be included in hotel stays.

  17. Meiling.echl.f09on 24 Jan 2010 at 1:06 pm

    1. The over-consumption of alcohol creates effects outside the market, for example, the casualties caused by drunk driving and hospital fees (covered by taxpayers) for people who have alcohol related problems. Therefore it can be classified as a market failure: a mixed, negative externality in which is initiated in consumption but received in production.

    2. They could impose a tax on alcoholic drinks, making it more expensive to consume a large number of drinks. People would still buy drinks as demand is relatively inelastic, but, with the imposition of a tax, they might not have the purchasing power to consume enough to make to make them dangerously drunk. However, if the tax must be thought through carefully: too high and this will encourage the creation of a black-market (which might create even more disastrous negative externalities), too low and it will have no effect.

    Higher penalties for people who disrupt public order and safety as the result of over-consumption of alcohol might work, however this must be made known to the public, thus necessitating some form of negative advertising to reduce demand.

    3. Proprietors of bars and clubs in resort areas benefit from the Briton's excessive alcohol consumption because it earns them a greater profit. They might purposely offer drinks at lower than normal rates in order to attract demand and remain competitive (assuming that demand for a particular alcoholic drink is price elastic). However, their encouragement of excessive alcohol consumption in order to attain a private benefit comes at a social cost. This social cost includes things like damage to public property by drunk holiday makers and the casualties and hospital fees as a result of drunk driving and bar fights. These costs are born by taxpayers all around the country. So unless the government takes economic or legal action, the private cost of running a bar in a popular resort will not reflect the social cost.

  18. Laura Yilmazon 25 Jan 2010 at 1:01 am

    I would agree that alcohol consumption could be classed as a form of market failure. To be specific, it is a negative externality in consumption. This means that a good, such as alcohol, is being overconsumed below the social optimum, and is causing negative spillovers in consumption, such as widespread drunkenness, crime, and in the worst cases death due to overconsumption.

    If tourist nations were serious about reducing alcohol consumption they would have several available options; negative advertising as mentioned in the article is one option, but a more effective option which was mentioned by Horia would probably be to introduce an indirect tax onto alcohol, raising the price significantly could make the cost of more than two or three drinks per night prohibitively expensive to most holiday goers, and noticeably lowering consumption as a result. Although raising the cost of alcohol could have a very negative effect on the tourism industry, it is likely that an important reason for traveling abroad for some tourists would be cheap alcohol and nightclubs. It is very possible that raising prices would dissuade tourists with less disposable income from traveling, and therefore substantially cutting down service industry profits during the vital tourist season. Even if the price of alcohol was increased it is likely that they would be driven down again as other tourist locations lowered prices in order to draw in customers. I believe the best options for controlling the problem would either be extensive negative advertising campaigns, or severe fines and penalties for those caught breaking laws while under the influence of alcohol, these could act to reduce the incidence of heavy drinking related issues by providing a disincentive to overindulge without causing a rise in alcohol prices and scaring away consumers as a result.

  19. Laura Yilmazon 25 Jan 2010 at 1:03 am

    mei ling, i think your answer is full of thought and knowledge

  20. Trevor.echl.f09on 25 Jan 2010 at 10:17 am

    1. Yes, overconsumption of alcohol is definitely a market failure. It would probably be classified as a negative consumption externality. This is because an overconsumption of the good on the part of consumers is creating the negative externalities which affect the consumers and not the producers.

    2. They could limit the sale of alcohol. This would bring the marginal private benefit back in line with the marginal social benefit and ensure that there is no overconsumption of alcohol, at least on the hotel’s premises. Other actions that could be taken include banning the sale of alcohol all together although this may also have a negative effect.

    3. While they are able to sell a lot of alcohol to many willing and ready tourists, the effect this alcohol is having on their behavior is a cost that must be shouldered by the taxpayer. Stupid behavior from drunks results in police officers having to divert their resources to address concerns of the actions of tipsy tourists. Also, ambulances and hospitals are sometimes needed and this definitely pulls money straight from the taxpayer. The private cost of running a bar does not reflect the social cost. The only time it does is when bar fights occur and the owner of the bar has to deal with the effects of this. Otherwise, the social costs are felt outside the bar where most of the stupid actions take place and where resources from the community must be diverted. That is why resorts need to put limits on the sale of alcohol because the bar tenders probably won’t do it themselves so long as they are earning money.

    Trevor Tezel

  21. Trevor.echl.f09on 25 Jan 2010 at 10:25 am

    Meiling, you bring up some good points. We seem to disagree on whether or not this situation is a mixed negative externality or a negative consumption externality. I see where you’re coming from, and I’m in the process of researching to determine the answer to this…. Also, you take a different route then me on the actions that the resort should take in order to address this problem. While a cap seems the most appropriate to me, your idea of a tax got me thinking. It would raise government revenue and possibly help offset some of the social costs of these drunk tourists. Maybe they can pay the costs of the stupid actions they will be taking later in the evening by buying alcohol! It’s an interesting concept to consider.

    Trevor Tezel

  22. Masaya.echl.f09on 25 Jan 2010 at 1:43 pm

    1. Over-consumption of alcohol is a market failure because the consequence of this is causing negative externalities to the society as a whole. Although it is a benefit for the individual drinking the alcohol – personal positive externality – the crazy behavior triggered by drunkenness is causing negative social externality.

    2. If the tourist nations were serious about cracking down on drunk tourists, they could, as a first step, initiate prevention awareness campaigns through posters and commercials, they could establish penal laws to fine any violators including bars and shops who sold alcohol to the violator. Higher taxation on alcohol could be an alternative way for prevention. High tax would induce people not to spend money on alcohol; and for every purchase of alcohol the government would gain more tax revenue.

    3. Because bars and clubs in resort communities are likely to be fully loaded, especially during holiday season when many tourist arrive, hence, their profits made is tremendously large. Yet, the profits they make does not reflect the total social cost. The negative externalities brought by the over-consumption of alcohol in these clubs and bars are costing massive amounts of government expenditures. For example, personnel expense for cleaning up mess and deploying police officers, maintenance fee to fix broken government property, etc.

  23. Masaya.echl.f09on 25 Jan 2010 at 1:59 pm

    Trevor>>

    Though you said banning of alcohol sale is one method of prevention, do you not believe that such action would decrease overall sales of local bars and clubs, and consequently affect the resort's economy?

    In a way, the local economies are able to operate the way it is because of alcohol

  24. Jacob.echl.f09on 26 Jan 2010 at 5:10 am

    1. Yes, it is a negative consumption externality. The overconsumption has harmed the consumers without harming the producer.

    2. They could increase syntaxes in order to deter consumers from purchasing more alcohol and producers to sell because it becomes more inconvenient.

    3. The proprietors are usually going to have a high demand for alcohol in tourist countries, but then the taxpayer ends up paying more. Their behavior while drunk can get them arrested or injured, which hurts them and not the proprietor. Also, the proprietors don’t lose consumers because the people arrested are tourists and would have left anyway, and there will always be more. The private cost does not reflect the social cost. The social costs usually happen outside the bar like in the street or on a plane. The only time the private cost affects the social cost is if there was a Star Wars Cantina situation going on, but this is not very common.

  25. Jacob.echl.f09on 26 Jan 2010 at 5:12 am

    Masaya,

    You have good ideas on how to fix this problem, good job. Taxes are a great way to get revenue and deter consumers, but anti-alchohol campaigns are simply genius.

  26. Mattea.echl.f09on 26 Jan 2010 at 5:20 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Because the effects of the consumption go beyond simply the consumer, it's an externality. This is a negative consumption externality because it harms people.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The best option would be to place a tax on alcohol. This would raise the price and discourage people from buying it. If they don't buy it, they can't drink it.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors are making lots of money off of the sale of alcohol. Their benefit is at the expense of the community, who has to suffer the antics of the drunken tourists. The private cost is nowhere near the social cost. The hospital visits and crimes committed exceed by far the cost of maintaining a bar.

  27. Mattea.echl.f09on 26 Jan 2010 at 5:24 am

    Jacob,

    Would you say that the producer isn't harmed at all? If you look at the owner of the bar as the producer, then they are likely part of the community. They will have to deal with the drunks, the same as everyone else. Generally, though, I would say that you are correct in labelling it as a negative consumption externality.

  28. Meiling.echl.f09on 26 Jan 2010 at 7:28 pm

    Trevor,

    Now that I've read your comment, I've rethought my position a little. It seems that it is a negative externality that is received both in consumption and production. I agree with you in that the overconsumption of alcohol harms consumers as well (for example with healthcare costs), but this in turn affects the production of other goods and services (I don't think I was clear on this earlier on), because people who have chronic alcohol problems and health issues are unable to work productively.

  29. Dennis.echl.f09on 27 Jan 2010 at 1:32 am

    1. The overconsumption of alcohol is a market failure and can be classified as a negative externality because it has negative effects outside of the price market.

    2. If the tourist nations were serious about cracking down on drunk tourists, and were not interested in the particular effects it had on the market, they would simply tax the good and it would slowly decrease the overconsumption, but the issue with this, as mentioned in the article, a tax could completely drive away the consumers and cause the market to collapse. The best idea, with the market in mind, would be to limit the supply of alcohol and therefore, limit the consumption.

    3. The proprietors of bars and clubs are benefitting at the expense of the taxpayers because they get to continue to supply consumers that overconsume, while taxpayers have to pay for all the damage that the drunk British people do. The private cost of running a bar does not reflect the social cost because the cost of running a bar does not include all the damage done by the people outside of the bar (the social cost).

    -Dennis-

  30. Dennis.echl.f09on 27 Jan 2010 at 1:36 am

    Mattea,

    Do you think that taxing alcohol would really be the best route regarding the sensitivity of the market? The article mentions how consumers really easily leave the market if the conditions become unfavorable and perhaps go to another more favorable market, so I'm thinking that it wouldn't be the best idea. Maybe a better idea would be to just strengthen the police force to deal with these people..

    -Dennis-

  31. chamonix.echl.f09on 27 Jan 2010 at 5:53 am

    1. I think that the drinking issue is a market failure. I think that it could be viewed as both a negative consumption externality and a negative mixed externality. It is a negative consumption externality because British drinkers lower the quality of life for locals and a negative mixed externality because British drinkers are hurting their own health and safety.

    2. If local authorities were serious about cracking down on alcohol, there are various steps that they could take. However, all of these steps would come with a risk of hurting the economies of their communities. Some of these actions might include higher arrest rates and less police leniency (although this would be very expensive for taxpayers), limits on the number of bars in a neighborhood (although this would cut jobs), higher taxes on drinks (although this would reduce consumption and tourism which would take money away from the community.) All of these actions might be effective, but they would have heavy costs for the communities.

    3. Bar and resort owners in tourist-based communities are benefiting from taxpayers in other areas of their nations because those taxpayers must pay for negative externalities of the resorts. The private costs of running a bar do not reflect the social costs. The cost of street cleanup, police actions, lawsuits, jail, and emergency medicine is very high as compared to the cost of running a bar.

    Chamonix

  32. chamonix.echl.f09on 27 Jan 2010 at 6:09 am

    Masaya,

    I really liked your post. It helped me to better understand the whole situation, and I especially liked how you pointed out that tourists are seasonal.

    I had a few questions, though. You stated that one way for alcohol overconsumption to be reduced was for the government to establish penal codes which would fine any establishment that sold alcohol to someone who committed a crime. I do not see how this could work. Wouldn't this be punishing business owners for acting BEFORE a crime was committed? (Is that legal or just?) I agree that bartenders should not serve patrons who are already drunk, but isn't this a fine line and very subjective? Finally, how would police determine where the drink was served? If a person was drunk enough to participate in the kind of behavior that would spur this level of legal action, they might not remember where they had been. I feel like this would be an ineffective plan of action.

    Thanks so much for raising these points!

    Chamonix

  33. Ralph.echl.f09on 29 Jan 2010 at 2:44 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    When a negative production externality is initiated, the firm will not be made to pay for the cost imposed on others. The overconsumption of alocohol in a market failure. The real cost to society is large, as drunk people cause havoc among the streets at night, and authorities must come in to sort out problems. The private benefit for all the companies that produce the alcoholic beverages to benefit from all the revenues gained.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The tourist nations could increase the price of alcohol, however this might affect their economies, as tourists might be less inclined to. Local authorities taking stricter policies. However this could increase the cost to society, using public money. I like Dennis's comment on limitting the supply, however I don't believe this is the solution, as it would be unfair on consumers who do not abuse alcohol.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Financial benefits for these bars are high, where as social cost is large, as damange is done to property, and cost of local authorities having to step in to take action. Or hopsital admissions. The social cost is alot higher then the social benefits recieved by the bar owners.

  34. sara.echl.f09on 31 Jan 2010 at 12:44 am

    1. I think that the overconsumption of alcohol definitely is a market failure. I would say that it is a negative consumption externality because it’s the consumers that are being harmed and not the producers, the producers’ benefits actually increase with the overconsumption of alcohol.

    2. Well, they could increase the price of taxes on alcohol by a lot. This would make the producers less incline to produce it and the consumers less inclines to buy it.

    3. The proprietors of bars and clubs are benefitting from the increased sale of alcohol. The fact that their tourists means that there is an effect on the community outside the bar. This means that the private cost does not reflect the social cost because while the owner of the bar might have to pay taxes and pay to fix the bar after a lot of drunken tourists, they don’t have the costs that the government has when drunken tourists misbehave.

  35. sara.echl.f09on 31 Jan 2010 at 12:48 am

    Dennis,

    Do you think the government would be able to limit the supply of alcohol without taxing it? There are a lot of firms in this market and it would be very difficult to get them to limit their production. Taxing would probably be an easier way to limit the overconsumption.

    Sara

  36. daniel.echl.f09on 01 Feb 2010 at 11:46 pm

    1.Is over consumption of alcohol a market failure? If so, what type could it be classified as?

    over consumption of alcohol is a failure and can be classified as negative consumption externally because it directly effect the consumers and has no effects on the producer.

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    They could increase tax on alcohol reducing the cheap prices that lures tourists into buying vast amounts and then the money could be spent on advertising campaigns. they could look to increase the budget on the police force and enforce heavier fines on misbehavior.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors benefit because of the increase in the sale of alcohol as tourist buy exceptionally more then locals. Th private cost doesn't replicate social costs as they don't have to worry about there behaviour once quiting themselves from the bar and so the government gets left with these costs.

  37. daniel.echl.f09on 01 Feb 2010 at 11:50 pm

    sara.echl.f09

    hi sara

    in your answer you say increasing tax will reduce the likelyhood of producers producing it i think that theey still will with the nature of the product it i addictive so its inelastic so they would pass the cost on and produce same amount it jus with a higher price the tourist will buy less

  38. victoria.echl.f09on 02 Feb 2010 at 5:11 am

    1. Yes overconsumption of alcohol is a market failure. It could be classified as negative consumption externality this is because it affects the consumer and not the producer.

    2. They could make a law that only allows you to buy a certain amount of alcohol. They could also higher taxes on alcohol. These two examples would be a risk, as not as much money would come in from the tourists and tourists will not come anymore. It will also harm the community, as tourist money is very important in the development of a community.

    3. Bars and clubs in resort communities are benefiting of the expense of the taxpayers because they can sell drinks to the tourist and the tourist will gladly buy them and the ones actually paying in the end are the taxpayers when they have to pay for all the mess that happens outside of the bar or club.

  39. victoria.echl.f09on 02 Feb 2010 at 5:24 am

    Hey Trevor

    I am in one way disagreeing with you and in the other way I think your right. Alcohol should be band as this would definitely lower the number of drunken tourists to about 99% (some people don’t follow law and order) but on the other hand money coming from tourists because of alcohol is very important, as it is a lot of money also needed to develop the community and make even more tourists come.

    Vica

  40. Eline.echl.f09on 02 Feb 2010 at 12:44 pm

    Alcohol is a demerit good and would never do society any good, so the overconsumption of it would undoubtedly lead to a market failure. The market failure would be a negative externality, as there is an overallocation of alcohol. The many accidents and crimes as a result of excessive alcohol consumption will inflict large costs on society, so the externality is a negative consumption externality, initiated and received in consumption.

    One action tourist nations could undertake to reduce alcohol consumption by tourists is to raise alcohol prices. While this would provide the state with more money to raise awareness of the problem through, for example, advertising, it would probably not be that effective as the tourists go on holiday with the intention of drinking a lot and higher prices would not influence their consumption behaviour that much. Limiting the amount of alcohol in tourist resorts is also an option though it would decrease the satisfaction of the tourists.

    Proprietors of bars and clubs in resort communities benefit from the tourists' alcohol overconsumption, probably selling alcohol at lower prices to compete with rivaling bars and clubs and encourage the tourists to drink more. This of course is at expense of the taxpayers from other parts of the tourist nations, who have to pay for the costs imposed by drunk tourists. Money and police forces to keep the behaviour of the tourists under control will be very much present near resorts but would be lacking in other parts of the nation. Initiated with in production(the bars and clubs selling alcohol at lower prices) and received in consumption, this would be a mixed negative externality.

  41. Armando.echl.f09on 02 Feb 2010 at 1:12 pm

    -I believe that the overconsumption of alcohol is a market failure and that it is a negative consumption since the consumers are being harm in a long term effect, but the producers don't.

    -If taxes were inplemented or just the prices were really high people will decide to stop buying alcohol and producers will be mad since they will be losing a big profit.

    -The owners of bars and night clubs are smart since they gain a really high profit for the sale of alcohol and cigarttes, therefore places were the alcohol is cheaper there will be a great profit, eventhoug it will harm the tourists.

  42. Armando.echl.f09on 02 Feb 2010 at 1:14 pm

    Sara,

    actually I want to be the owner of this abandoned club called COLORS, in the most expesive part of the capital of Colombia, just be cause I sure that this will be a great method of gaining money and satisfying the consumers and tourists.

  43. Eline.echl.f09on 02 Feb 2010 at 11:22 pm

    Trevor,

    Banning alcohol might make it less available to tourists, thus reducing alcohol overconsumption, but it would definitely create a black market for it that would generate crime and violence, and the costs of enforcing this policy would be very high, requiring many police forces. On top of that, alcohol can be banned in one tourist nation but that doesn't mean it will be banned in all countries, which makes it easy for the tourists who don't want to drink water and soft drinks all the time to change their holiday destination. This of course would lead to enormous losses for the nation prohibiting alcohol.

    Your idea of penalizing people before they get drunk to pay for the costs they will cause is excellent, but how will this be realized? Do you mean all tourists would have to be penalized, regardless of the fact that they might not get drunk? It is a very interesting idea though.

    -Eline

  44. Marcelo.echl.f09on 03 Feb 2010 at 6:14 am

    1. Indeed, overconsumption of alcohol is a market failure, since it is creating negative externalities, from consumers to society as a whole, including consumers and producers. I mention producers since, even though they gain a lot of money with British drunkards, their customers’ impulsive actions might as well frighten off other clients, such as in a bar fight.

    2. I believe that if the aim was to reduce the negative externalities created by drunken tourists, the general idea would be to discourage such people from drinking too much. Such thing can be achieved through setting higher prices on alcohol, for example through a new tax, or price floors. The government could also force bars to close earlier. Furthermore, the government could set severer punishments or higher fines to those found driving drunk, or those causing trouble. The general idea would be to scare them with the law.

    3. Of course, to a certain extent, the owners of bars are really enjoying this burst of British tourists which have become their number one clients, raising sales enormously, definitely increasing profits. However, as I said before, these drunken tourists might as well cause trouble inside the bars, deterring other customers, and maybe causing property damage, an extra cost. Thus, I would say that even if under a certain point of view the private cost is more than the social cost, to some extent they might be equated. (I am not taking into account deaths, which as far as I know, are rarely caused by drunkenness alone, but actually by driving drunk.) Quoting from Chamonix, “street cleanup, police actions, lawsuits, jail, and emergency medicine” are social costs which are indeed quite costly, but not more than losing clients, having property destroyed, having the police question you about the given incident and consequences in general.

  45. Marcelo.echl.f09on 03 Feb 2010 at 6:28 am

    Victoria,

    I believe that banning the sale of alcohol or increasing the prices will not reduce the amount of tourists as much as you imply, or at least not as much as to find a perceptible difference in the statistics. I mean that, as far as I know, very few people go to Greece because of the alcohol… I think that they go for some other reason actually… Getting drunk is only an additional consequence of partying and vacations, which will not discourage any tourist from visiting Greece. There are many other things to do Greece than getting drunk. All right, bars will lose some money, but not because of the lack of tourists but because nobody wants to buy such expensive alcohol.

  46. Catherine.echl.f09on 04 Feb 2010 at 3:21 pm

    1.) The overconsumption of alcohol creates many negative externalities – like crashes and such. While the market may not necessarily have negative externalities in production, it certainly creates a marked failure with overconsumption.

    2.) The main economic action I can think of here is the prohibition of alcohol. While prohibition would certainly take away some profits, it would protect the consumer and the general community. If prohibition is too harsh of a measure for resort communities, the government could place a limit on how much alcohol a consumer could purchase at a time. That way, overconsumption would be much harder than it is now.

    3.) Taxpayers must often cover the costs of police, ambulances, health care, etc. of others. So, when a tourist gets drunk and makes stupid decisions, the costs of those decisions are often carried by the taxpayer. However, overconsumption of alcohol does not affect the bar negatively. The owner of the bar generally does not have to pay for the police intervention, ambulance, hospitalization, jail, etc. of the tourist. Therefore, the private costs of running a bar do not necessarily reflect the social costs. The owner of the bar will sell alcohol and therefore make a profit, while the taxpayer must carry the burden of the overconsumption of alcohol.

  47. Catherine.echl.f09on 04 Feb 2010 at 3:24 pm

    Hey Marcelo,

    We have pretty different responses for the third question here. I really like your take on it – that the social and private costs will be equated. However, do you think the loss of customers or the other examples you have will balance with all the people who are arrested or damage property outside of the bar? It seems like more happens once the customer leaves the bar drunk… but I may be completely wrong here. I know that last year, the most costly damage caused by a drunk tourist where I live occurred almost 20 miles away from the bar. That was definitely more of a social cost than a private cost.

    Catherine :)

  48. Issa.echl.f09on 09 Feb 2010 at 12:52 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Over consumption is a market failure as it leads to negative externalities. It could be classified as a mixed consumer initiated negative externality as it is caused by consumers overdrinking alcohol and engaging in utterly stupid activities. These activities adversely affect other consumers as they have their vacation experiences disturbed, but they also adversely affect tax payers and may lead to added regulation which affects bar owners.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The tourist nations could impose higher minimum drinking ages or put quotas on the amount of drinks that a person is allowed to purchase and consume every night. This would probably serve to drastically decrease the drunken behaviour.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs in resort communities greatly benefit from the drinking excess because can sell a lot more alcohol. Their success does not take into account, however, the costs incurred by other sectors of the society from the drunken tourists. This means that they can charge lower prices than they would if they had taken into account the social costs in addition to the private costs. This means that they over produce.

  49. Issa.echl.f09on 09 Feb 2010 at 1:01 am

    Hey Catherine,

    re: marcelo

    I agree with what you said with regards to Marcelo's comment. I think that his interpretation of the question is interesting, but I agree more with your interpretation. The problems caused by the drunken tourists occur some ways away from the actual bars that supply the alcohol. Plus the sight of drunken tourists probably would act as a deterrent to other tourists who want to become drunk, but like a signpost for where the past is.

    -Issa

  50. Yuto Takaokaon 01 Nov 2010 at 8:57 pm

    1) Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Over consumption of alcohol is a market failure unless the government intervenes the market to correct the market failure. This is classified as negative externalities of consumption as the alcohol the consumer drinks have negative spill over effect to the society.

    2) If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The economic action they can take is definitely raising the tax up for the alcohol. By doing so, less tourists will get drunk and also get revenue from the tax so they can use it to fix any damage caused by the drunk people in the society.

    3) How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs in resort communities are benefiting at the expense taxpayers basically because they can earn profit. Even though the society has to pay for the social spillover costs that arise with the drunk people, this does not affect the proprietors greatly.

  51. konstantin.zon 08 Dec 2010 at 11:51 pm

    1) Yes Over consumption of Alcohol is example of market failure because it creates negative externality which isn’t paid by British traveler but by society of a host country. Especially tax payers are host countries whose tax money is spent on extra policy costs along with it producers of the host countries may also suffer because drunk British Tourists may behave badly( fight, scream) frighten away other potential costumers ( visitors ).

    It is a negative Externality of consumption.

    2) I see two ways of how to crank down drunk tourist.

    a. My first idea is a small discriminative I think that putting a tax on Alcohol for non country citizens this will make tourist/visitors spend more money or drink less in both ways it will be positive for a host country

    b. Another way could be putting serious fines for behaving inappropriately under influence of alcohol though causing trouble to other tourists and local residents.

    Policies.

    Not allowed to drive car drunk

    Not allowed to shout in streets after 12.pm

    Not allowed to walk drunk in streets without a sober companion( you must either call a taxi or stay where you are till you will feel more controlling of yourself.

    Not allowed to fight or destroy other people’s property

    Not allowed to offense Policy

    Not allowed to cell alcohol till 25

    These policies could also help my country (Georgia)

    3) A British tourist is a good costumer for owners of Bars and Clubs in Touristic Resorts of Greece Egypt Monaco etc. The more they drink More money they spend So more revenue for Bar and club owners the owners of Bars care only about their Private benefit they don’t think about trouble that the tourist may cost when they live the bar because they don’t pay anything for damage a drunk man can cause, other Tax payers in host country Pay for it. The private cost of running a bar in a tourist country doesn’t reflect the social cost because social cost is paid by Host countries Tax payer( not the owner). However The British drunk tourists aren’t the only costumers in bar their behavior is disturbing their clients which may cause the loss of profit of a certain bar.

  52. Sondoson 10 Dec 2010 at 11:57 pm

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of tourists in foreign countries in this case would very well be considered to be a market failure. This is demonstrated by the fact that the consumption of excess alcohol has a negative effect upon a third party (the bars & clubs lose customers due to the tourists’ irritating behavior, the host country police are distracted from their routine duties towards their country to be occupied by the drunken tourists, etc.). This is defined as a negative externality, one among the many sources of market failure. A negative externality also implies that the there is an external cost that should be added to the private costs of alcohol consumers to reflect the full cost of excessive alcohol consumption of tourists on the host society.

    To be more specific, alcohol consumption is a negative externality of consumption, for when consumed by individuals (tourists in this case), adversely affect third parties. It is also a mixed externality due to the fact that the negative externality is initiated in production but received in consumption.

    • If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Firstly, it’s important to note that the host country will most likely not take drastic measures in order to reduce the negative externalities caused by drunken tourists since this would trigger an undesirable effect on the bars and clubs which depend on alcohol consuming tourists for their revenue and subsistence, which, if plummets drastically, will perhaps jeopardize the host country’s economy.

    One should also consider the fact that alcohol is an easily addictive product, and will therefore have a fairly inelastic demand. This implies that although taxes may not be very effective in decreasing demand, it will decrease nonetheless, even though the percent decrease would be proportionally less than that of the increase in price, which is exactly the effect desired in this case. So my first proposition would be imposing a ‘tourist’ tax on alcoholic beverages. What type of tax? I personally think that an ad-valorem tax would be the best type of tax the host government can impose, given that the more drinks you buy, the more expensive they become, and so the consumers would be less inclined to drink as many alcoholic beverages. They would still be relatively cheap at first, but then the rapid increase in their respective price would certainly urge tourist to reconsider the number of drinks they intend to have.

    Another option that can be taken into consideration by host countries to reduce the negative consumption externalities is to provide negative advertisement for excess alcohol consumption in attempts to reduce its demand.

    Quotas can also be imposed as to the maximum number of drinks a male/female tourist may have, corresponding to their respective physiology.

    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The money collected from the host country’s tax payer usually goes into government investment in health care, contraction of public infrastructure, the offering of certain services such as protection from national police, the upholding of the country’s economy, etc. However, when drunken tourists ‘unconsciously’ destroy public property, are injured and admitted to a hospital, or must be recruited by the national police, the proprietors of the clubs and bars who allowed their customer to reach this state, are free from the fees of any of the mentioned social costs, all financed by the tax payers, and gain high rates of revenue nonetheless.

    Personally, I would think that given the mentioned example, the social cost does not reflect the private cost of running a bar in a place such as Malia or Greece due to the negative externalities of consumption that must be considered as part of the social cost, yet excluded from the private cost. Perhaps the only scenario where the social cost may be reflected by the private cost is when the bar owner must pay for any damages caused by drunken consumers.

  53. Sondoson 11 Dec 2010 at 12:06 am

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol by tourists in foreign countries in this case would very well be considered as a market failure. This is demonstrated by the fact that the consumption of excess alcohol has a negative effect upon a third party (the bars & clubs lose customers due to the tourists’s irritating behavior, the host country police are distracted from their routine duties towards their country to be occupied by the drunken tourists, etc.). This is defined as a negative externality, one among the many sources of market failure. A negative externality also implies that the there is an external cost that should be added to the private costs of alcohol consumers to reflect the full cost of excessive alcohol consumption of tourists on the host society.

    To be more specific, alcohol consumption is a negative externality of consumption, for when consumed by individuals (tourists in this case), it adversely affects third parties. It is also a mixed externality due to the fact that the negative externality is initiated in production but received in consumption.

    •If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Firstly, it’s important to note that the host country will most likely not take drastic measures in order to reduce the negative externalities caused by drunken tourists since this would trigger an undesirable effect on the demand clubs who depend on alcohol consuming tourists for their revenue, which, if plummets drastically, will perhaps jeopardize the host country’s economy.

    One should also consider the fact that alcohol is an easily addictive product, and will therefore have a fairly inelastic demand. This implies that although taxes may not be very effective in decreasing demand, it will decrease nonetheless by a proportionally smaller decrease in demand than raise in price (the effect desired in this case). So my first proposition would be imposing a ‘tourist’ tax on alcoholic beverages. What type of tax? I personally think that an ad-valorem tax would be mopst effective, given that the more drinks you buy, the more expensive they become, and so the consumers would be less inclined to drink as many alcoholic beverages. They would still be relatively cheap at first, but then the rapid increase in their respective price would certainly urge tourist to reconsider the number of drinks they intend to have.

    Another option that can be taken into consideration by host countries to reduce the negative consumption externalities is to provide negative advertisement for excess alcohol consumption in attempts to reduce its demand.

    Quotas can also be imposed so as to the limit maximum number of drinks a male/female tourist may have, corresponding to their respective physiologies.

    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The money collected from the host country’s tax payer usually goes into government investment in health care, construction of public infrastructure, the offering of certain services such as protection from national police, the upholding of the country’s economy, etc. However, when drunken tourists ‘unconsciously’ destroy public property, are injured and admitted to a hospital, or must be recruited by the national police, the proprietors of the clubs and bars who allowed their customer to reach this state, are free from the fees of any of the mentioned social costs, all financed by the tax payers, and gain high rates of revenue nonetheless.

    Personally, I would think that given the mentioned example, the social cost does not reflect the private cost of running a bar in a place such as Malia or Greece due to the negative externalities of consumption that must be considered as part of the social cost, yet excluded from the private cost. Perhaps the only scenario where the social cost may be reflected by the private cost is when the bar owner must pay for any damages caused by drunken consumers.

  54. Sondoson 11 Dec 2010 at 12:11 am

    Re: konstantin.z

    The imposition of strict regulations concerning the age and accepted behaviour by the host government was a clever idea, a direct way of tackling the issue. Accompanied by appropriate advertisement of the regulations, they seem to be the most effective way of reducing the negative externalities caused by tourist alcohol over-consumption. Of course only if there will be a considerable fine given to those who do not respect the given regulations, would there actually be an effect on alcohol demand.

    Moreover, I found it interesting that you considered public disturbance caused by drunken tourists both inside and outside the bar as a portion of the negative externalities which could possibly decrease demand; a point I hadn’t considered at first.

    Re: Marcelo

    I was intrigued by your suggestion that: “losing clients, having property destroyed, having the police question you about the given incident and consequences in general was more costly than “street cleanup, police actions, lawsuits, jail, and emergency medicine”.” I was under the impression that they were all possibilities of negative externalities of excessive alcohol consumption, and nearly all financed by the taxpayers, regardless of which is more costly.

    I also agree with you when you mention that scaring alcohol consumer tourists with the law would be by far among the most effective measures considered, as mentioned by Konstantin, not likely to decrease the demand for vacations at the host country in question. Furthermore, strict regulations may give out a stronger sense of security in the country, which could perhaps even stimulate demand for vacations…

  55. Frederico Con 13 Dec 2010 at 11:56 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes, in this case it can be seen as producing negative externalities, and an over-provision of demerit goods. Thus there is an oversupply of alcohol in the market, that causes huge disturbances.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The first step would be to raise the taxes of drinks so that the customers would think twice before taking a chunk out of their wallets. The government could limit the amount of alcoholic beverages that the resorts could buy; thus reducing supply in the resort.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    They are benefiting from taxpayers, because a lot of the money paid goes to providing police support and health services to those areas. Thus the inhabitants of the resort communities get better health services and year round security that is better than the rest of the nation.

    The private cost of running a bar in Malia does not get even close to the social cost. This because society gets all the negative externalities shunted on them; on the other hand the bar owners simply kick ruffians out of the establishment, leaving them to wreak havoc in the town.

  56. Frederico Con 13 Dec 2010 at 11:59 pm

    RE: Konstantin

    Your second answer is good, but it is more of a legal matter than an economic one, any more ideas?

    I agree with everything else you say though, and your last answer is quite similar to mine. The last sentence about paying for damage done is actually not a bad idea for use in the second question, you could perhaps make it a law, and fine tune it so that the police would know where the "hooligan" had been to so that that bar would pay for the damage.

  57. Noahon 14 Dec 2010 at 10:16 am

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a market failure since it contributes to a loss in social welfare. The overconsumption of alcohol is an example of an “over-supply of demerit goods”, which leads to a market failure. Since overconsumption of alcohol is a demerit good (a good the government does not want and thinks it affects consumers and society negatively), the government would like to stop it in order to lessen the costs of hospital fees and other problems.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Authorities could start fining the drunken tourists much more for disorderly conduct. By handing out fines at much higher prices, the incentive will be to not pay as much by not getting as drunk. The higher fines on drunks around the resorts could also help pay for their hospital fees. Another tactic is to tax people more to enter and exit the country and these extra taxes could pay for more police and hospital fees.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs are benefiting from all of the drinking tourists do at the expense of taxpayers in other countries because often times it is the taxpayers in the host countries who pay for the health care of all of the health care needed for those tourists who drink to much.

    In Malia, Greece the cost of running a bar does not come close to the social cost. The 8$ bundles tourists can buy at bars are not even close to the money needed to pay for drunken tourists mishaps and rowdy behavior.

  58. Noahon 14 Dec 2010 at 10:19 am

    Re: Frederico C

    You say that "the inhabitants of the resort communities get better health services and year round security that is better than the rest of the nation." I would think that it would be worse or that they are losing out because their money is actually going towards these drunk tourists who bar owners benefited from. What are your thoughts?

  59. abhinav_sahon 14 Dec 2010 at 7:34 pm

    Is overconsumption of alcohol a market failure?

    Market failure arises when there is a misallocation of resources in an economy resulting from over/under production or consumption. In the case of alcohol, the marginal private benefit from consumption exceeds the marginal social benefit and thus results in an overconsumption of alcohol, above and beyond the optimum amount for society. Thereefore alcohol over consumption is a cause of market failure as the market would be better off from less alcohol consumption.

    If so, what type could it be classified as?

    It would be a mixed negative externality (accruing to consumers and producers of night clubs by consumers of alcohol).

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    An indirect tax could be placed upon the sale of alcohol in those areas thus increasing the private cost to consumers, thus reducing demand for the product. Furthermore, a quota could be levied upon the sale of alcohol disallowing more than a certain quantity of bottles to be sold to tourists.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations?

    Taxpayers in other parts of the tourist nations fund the provision of police services in the local areas to regulate the actions of the drunk tourists. Furthermore, they indirectly fund the healthcare benefits that drunk tourists may receive if need be in the tourist areas. Proprietors of bars and clubs however benefit as the tourists pay them for the alcohol (their revenue increases yet the external costs e.g. healthcare do not accrue to the proprietors). Thus, they benefit at the expense of taxpayers in other parts of the nation.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost?

    No, as the private costs only include those that accrue directly in financial terms to the proprietor of the bar. These include wages, cost of electricity, rent for premises. However, the social cost includes the costs that accrue to society as a whole as a result of the consumption of alcohol. Costs result due to irrational action of drunk tourists e.g. accidents, vandalism, inappropriate behaviour, in addition to external costs of the bar e.g. loud music, congestion in the area. These external costs constitute the true social cost to society of running a bar but are not factored in the monetary private costs. Thus, if social costs exceed private costs, overproduction takes place and thus the supply of bars is allocated inefficiently; there are more bars than are optimum for society's greater good.

    Explain.

  60. abhinav_sahon 14 Dec 2010 at 7:34 pm

    Is overconsumption of alcohol a market failure?

    Market failure arises when there is a misallocation of resources in an economy resulting from over/under production or consumption. In the case of alcohol, the marginal private benefit from consumption exceeds the marginal social benefit and thus results in an overconsumption of alcohol, above and beyond the optimum amount for society. Thereefore alcohol over consumption is a cause of market failure as the market would be better off from less alcohol consumption.

    If so, what type could it be classified as?

    It would be a mixed negative externality (accruing to consumers and producers of night clubs by consumers of alcohol).

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    An indirect tax could be placed upon the sale of alcohol in those areas thus increasing the private cost to consumers, thus reducing demand for the product. Furthermore, a quota could be levied upon the sale of alcohol disallowing more than a certain quantity of bottles to be sold to tourists.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations?

    Taxpayers in other parts of the tourist nations fund the provision of police services in the local areas to regulate the actions of the drunk tourists. Furthermore, they indirectly fund the healthcare benefits that drunk tourists may receive if need be in the tourist areas. Proprietors of bars and clubs however benefit as the tourists pay them for the alcohol (their revenue increases yet the external costs e.g. healthcare do not accrue to the proprietors). Thus, they benefit at the expense of taxpayers in other parts of the nation.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost?

    No, as the private costs only include those that accrue directly in financial terms to the proprietor of the bar. These include wages, cost of electricity, rent for premises. However, the social cost includes the costs that accrue to society as a whole as a result of the consumption of alcohol. Costs result due to irrational action of drunk tourists e.g. accidents, vandalism, inappropriate behaviour, in addition to external costs of the bar e.g. loud music, congestion in the area. These external costs constitute the true social cost to society of running a bar but are not factored in the monetary private costs. Thus, if social costs exceed private costs, overproduction takes place and thus the supply of bars is allocated inefficiently; there are more bars than are optimum for society's greater good.

  61. abhinav_sahon 14 Dec 2010 at 7:35 pm

    Market failure arises when there is a misallocation of resources in an economy resulting from over/under production or consumption. In the case of alcohol, the marginal private benefit from consumption exceeds the marginal social benefit and thus results in an overconsumption of alcohol, above and beyond the optimum amount for society. Thereefore alcohol over consumption is a cause of market failure as the market would be better off from less alcohol consumption.

    Consumption of alcohol would be a mixed negative externality (accruing to consumers and producers of night clubs by consumers of alcohol).

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    An indirect tax could be placed upon the sale of alcohol in those areas thus increasing the private cost to consumers, thus reducing demand for the product. Furthermore, a quota could be levied upon the sale of alcohol disallowing more than a certain quantity of bottles to be sold to tourists.

    Taxpayers in other parts of the tourist nations fund the provision of police services in the local areas to regulate the actions of the drunk tourists. Furthermore, they indirectly fund the healthcare benefits that drunk tourists may receive if need be in the tourist areas. Proprietors of bars and clubs however benefit as the tourists pay them for the alcohol (their revenue increases yet the external costs e.g. healthcare do not accrue to the proprietors). Thus, they benefit at the expense of taxpayers in other parts of the nation.

    No, as the private costs only include those that accrue directly in financial terms to the proprietor of the bar. These include wages, cost of electricity, rent for premises. However, the social cost includes the costs that accrue to society as a whole as a result of the consumption of alcohol. Costs result due to irrational action of drunk tourists e.g. accidents, vandalism, inappropriate behaviour, in addition to external costs of the bar e.g. loud music, congestion in the area. These external costs constitute the true social cost to society of running a bar but are not factored in the monetary private costs. Thus, if social costs exceed private costs, overproduction takes place and thus the supply of bars is allocated inefficiently; there are more bars than are optimum for society's greater good.

  62. abhinav_sahon 14 Dec 2010 at 11:56 pm

    Re:Noah's comment

    Noah, I completely agree with your idea of a fine. Sharper fines for higher consumptions of alcohol will not only limit the consumption of alcohol but will also make people more cautious of their actions as they face the fear of a fine. I initially thought an indirect tax would function better, however given your answer, I feel an indirect tax would not have a direct/immediate impact on the situation and therefore a fine is much better suited for short term purposes. I also think a fine is more effective as alcoholics cannot ignore it – with an indirect tax the 'tax' portion is often considered as part of the price and so alcoholics may not always realize its significance. Also, a tax would not have much effect as demand for alcohol would tend to be inelastic – so quantity demanded would reduce at a less than proportionate rate to an increase in price. I therefore completely agree with your idea of a fine instead of a tax.

  63. Michael_Mayeron 15 Dec 2010 at 12:41 am

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a market failure due to consumption externalities. People consume too much alcohol, and begin to hurt the general public. The market failure occurs because there is a high demand for alcohol, but the companies do not have an increased price of production, so they feel no need to alter their price, and their supply is able to match the demand. Therefore, there is an over-consumption of alcohol.

    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Tourist nations could not allow people who are excessively drunk to enter tourist areas; they could hire police officers to stand at the door and measure the B.A.C. of each tourist who entered the area. Also, they could decrease their sales of alcohol to decrease the supply. That would help keep the amount of drunk people at a minimum.

    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    There is a social cost that is not a part of the private cost of running a bar, because the bar is not responsible for destruction due to drunkards. Therefore, the proprietors of bars benefit at the expense of taxpayers because they can make a profit off of selling their alcohol without having to worry about paying for the destruction that the people cause after drinking the alcohol. Instead, that cost falls into the laps of taxpayers.

  64. Michael_Mayeron 15 Dec 2010 at 12:44 am

    (Reply to Noah)

    That is a great thing to bring up, the 8$ bundles that tourists can buy. People spend a mere 8 dollars to put themselves in a state of complete inebriation, and then proceed to run around destroying public property. If they so much as break a window, they have already caused hundreds of dollars of damage that will likely have to come out of taxpayer's pockets.

  65. Javier Alberiteon 15 Dec 2010 at 5:44 am

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    In my opinion overconsumption of alcohol is clearly a market failure in which the private marginal analysis doesn’t take in account social factors. As it’s stated in the text the acquiescence of the social result of overconsumption of alcohol, the health damage, would shift the demand curve (MPB) to S1 (MSB) leftwards reducing the consumption and leading to an overproduction or oversupply of alcohol.

    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Mainly, the easiest measure to take in order to reduce the problem with drunk tourists would be to reduce the supply of alcohol to tourists, asking for a local ID in order to sell them alcohol and rationing the alcohol quantity allowed to the tourists to buy.

    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors are clearly benefiting because they’re getting high incomes of the sell of alcohol because tourists are willing and able to buy alcohol, but the other taxpayers are only having the outcomes (that also have the proprietors) of paying the extra police needed to control the tourist once they are drunk, and although the proprietors do pay taxes extra for the police, their incomes are way higher than their outcomes.

    No, because the private cost is much higher than the social cost as they are damaging society as a whole and in result the MSC would be much higher than the MPC, which means that the supply curve would be shifted leftwards and there would be a virtual overproduction of alcohol in social terms.

  66. Javier Alberiteon 15 Dec 2010 at 5:47 am

    Reply to Michael_Mayer:

    Thank you for suggesting the measure of controlling the B.A.C of the tourists in order to let them in. It's a very smart measure and that would reduce alcohol consumption in the middle and long range instead of in the short one.

  67. Mitchell_Broughtonon 15 Dec 2010 at 8:16 am

    -Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes, it is market failure because the benefits gained from people buying the alcohol do not outweigh the costs. This would make drinking a negative externality and more specific a negatively mixed externality.

    -If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If the bar owners cared they could stop people who were over a certain blood alcohol limit before entering the bar. There could also serve a limited amount of drinks to people inside, possibly putting a sharpie mark on the person’s hand for every drink they buy.

    -How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Though the bartenders and club owners have to pay higher taxes due to the increase in police force, this also applies to the residents who are not partaking in the late night partying. Therefore, the residents are unjustly paying higher taxes. This late night binging not only increases taxes, but gives a bad name to Malia, Greece.

  68. Mitchell_Broughtonon 15 Dec 2010 at 8:30 am

    Reply to Michael Mayer:

    Very good idea about measuring the B.A.C. (as you can tell it's also in my post so I definitely think it's an excellent idea), and I like your reason for why the taxpayers will suffer. Many other things will affect the citizens taxes as well such as police force and possible indirect taxes on alcohol.

  69. Javier_Alonso_Martinon 15 Dec 2010 at 9:55 am

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    It is due to the fact, such overcompsumition being produced by alcohol is absolutely considered to be a market failure. The reason for such, would be that a negative externality has happen, where the government is already seeking to intervene in the situation to control the aspects of it.

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The real problem behind such idea should be that day by day, more tennagers are starting to drink alcohol on parties, clubs, street often and in high quantites. It means that what the goverment should be doing is allocating police controls on main points of the streets, such that these controls would be able to check the ID of the people going by it, just in case of teenagers. Moreover, such controls, could be better controlling the aspects of shops taht sell alcohol at low prices and high quantities, such that they can see if the process is legal and moreover, if the ratio between person and alcohol is rational. If not they could be penalizied.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs would be super benefited from this, due to teh fact the alcohol they seel could be at high prices, but because people just want to get into the mood´s party as fast as the can, then they be willing to pay for it, so it is worth it afterwards.

    Private cost and social cost are two opposite things, so the answer should be no. Private aspects should be mainly, the ones taht are based on the maintenace of the bar, while the social would be connected to the aspects being produced on the people by alcohol after the party is over, during the street time where vandalism or things like that are showed.

  70. Javier_Alonso_Martinon 15 Dec 2010 at 9:59 am

    Reply to Mitchell_Broughton:

    I found your explanation very accurate and explanatory towards such issue. I really liked the idea of the sharpie mark for each drink. But how is going to be able the owner of knowing whether a guy is being affected by over blood alcohol limit? Like I do not think people would like to be followed and interrupted during a party…What do you think about it?

  71. Jackson_Moteon 15 Dec 2010 at 1:39 pm

    Overconsumption could be classified as a form of market failure. In this case, it would be a negative externality because it is the unintended effect of the product. If consumption is over the social optimum, it has a possibility to increase crime, bad decision making and general drunkenness.

    The government could levy a high tax on the sale of alcohol. This would most likely lower the consumption. However, not in all cases because alcohol is an elastic item for some and an inelastic item for others. Unfortunately, if this tax worked in lowering consumption, this would mean that local businesses that sell alcohol will have lower revenue and will report losses in profit caused by the tax.

    The local taxpayers are bearing the brunt of the inebriated Brits. The tourists wont have to deal with the long term effects that their over consumption causes. Although revenue will increase during tourism seasons, the cost of accidents and other misfortunes that happen after overconsumption of alcohol will increase the cost spent on fixing these. Overall, they drink too much: It must be taxed.

  72. Jackson_Moteon 15 Dec 2010 at 1:46 pm

    Reply to Javier_Alonso_Martinez:

    1. I agree with you here.

    2. Are teenagers the main cause of this overconsumption though? From what I read in the article, it seemed to be the tourists and not necessarily the teenagers. However, I do also recognize that underage drinking could easily contribute to the overconsumption if it is left unchecked.

    3. The bars themselves will gain revenue however the government and taxpayers will lost money on paying for these social costs. Therefore from the standpoint of a bar owner, it seems as if it would be very profitable for them to sell alcohol regardless of the price and the implications that are said to be beyond their control.

    Your thoughts?

  73. Deepa_Johnon 17 Dec 2010 at 2:09 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    In my opinion overconsumption is a market failure as when consumers consume too much they tend to do things that affect people around them. The government knows this and would intervene to reduce the consumption of alcohol by increasing prices. This would be classified as a negative externality.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If they were serious they should put more police on the job as more people are going to visit more and over consume. Checking IDs is a good way to minimize over consumption of alcohol for underage drinkers.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs benefit from this because they get a profit and they do not need to worry about the external damage caused by costumers from their store except the resorts as they are part of community and will be help responsible. The price might affect because places like Malia and Greece are not 'popular' places to go so they need the money that they make from the few customers that go there.

  74. Merab_Khideshelion 18 Dec 2010 at 12:21 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    1)Yes of course it is a market failure, because it creates a negative externality of consumption. Which means that tourists who consume alcohol may damage the bars/pubs, by frightening the local clients. The bar/pub would lose its clients and the market would be damaged.

    2) Government could raise taxes on alcohol consumption for tourists and it would keep them from getting extremely drunk. When the alcohol will be too expensive for them, they won't start drinking, because of their money.

    3) The proprietors of bars and clubs are benefiting by selling alcohol to British tourists. When the drunk tourists have to pay taxes for drinking alcohol, this money goes to host countries and is spent on improving health/security services.

    The private cost of running a bar in Malia/Greece doesn't reflect the social cost, because social costs are payed by alcohol consumers.

  75. Merab_Khideshelion 18 Dec 2010 at 12:26 am

    Sondos,

    In first question you say that the drunken tourists make the bars lose customers and then you say that bars depend on alcohol consuming tourists for their revenues. So what would be the best way for keeping the alcohol consuming tourists in and also keeping the local consumers?

  76. Jaewan hongon 25 Dec 2010 at 12:07 am

    1) Of course the overconsumption of alcohol is a market failure. This is considered as negative externalities of consumption. Negative externalities of consumption are when they are consumed by individuals, adversely affect third parties. Britons over drank alcohol and they make noise, damage stuff like tables in a bar, irritating other tourists etc. Britons who drink a lot presumably enjoy some private benefits of drinking, but this will create external costs for other tourists and resorts. Therefore this case must be considered as a market failure. The allocation of alcohol failed.

    2) If the tourists were serious about this situation, resort would handle it by contacting the British Foreign Office or police. Another action that would occur in this situation is the extra tax on the alcohol so the demand on alcohol will fall among the British. But in my opinion since it is only British people who are making the problem, they should ban British drinking alcohol until certain amount so other tourists will not get any disadvantages of paying extra charge because of British.

    3) The proprietors of bars and clubs get benefit from British by selling them alcohol and getting the expense tax on alcohol. They also do not have to worry about other tourists getting irritated and not come to their bars or clubs because of over drunken British. Private cost of running a bar in a place like Malia, Greece does not reflect the social cost because bar and clubs are not responsible for the damaged articles. The destruction is paid by the British.

  77. Jaewan hongon 25 Dec 2010 at 12:12 am

    Depa,

    for the second question you said stationing police and checking the ID will decrease the problem caused by drunk British. But i don't think these are econoic actions (maybe not). the economic action that would come in this situation would taxing on alcohol by the governments.

  78. Fikeon 01 Feb 2011 at 12:30 am

    Really, great stuff to read, hands of

  79. Kang_San_Keumon 03 Feb 2011 at 9:50 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    The overconsumption of alcohol is indeed an example of market failure. It brings about a negative consumption externality because after a tourist drinks a sizeable amount of alcohol, he or she could eventually damage property, cause riots, or create disasters. Not only that, the overconsumption will also lead to a decrease in demand for the conflictive pubs and so the profit from the local businesses will be affected.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The tourist nations could impose sales taxes on the alcoholic beverages in the troubling areas. This would lead to a decrease in demand because of the price raise. Additionally, the pubs and bars will tend to sell less because they will also have to pay a large amount of tax.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs in resort communities benefit at the expense of taxpayers from other parts of the tourist nation mostly by the taxing of the alcohol. The private cost of running a bar in tourist regions will be less than the social cost because the private costs that the bars have are relatively less than the social cost drunk people getting in mishaps or accidents.

  80. Kang_San_Keumon 03 Feb 2011 at 9:52 pm

    @ Merab_Khidesheli

    I agree with most of your points but I just don't believe that the private cost and social cost do not reflect on each other. Clearly the social cost is higher causing the negative externality. This means that the social cost of drunk people destroying stuff and getting in car accidents is higher than the private cost of the businesses.

  81. mboadeon 04 Feb 2011 at 9:52 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes, overconsumption of alcohol is a market failure because of the negative externalities to the society. Some of this negative externalities are the damage to property and riots will affect the place which the British are doing tourism.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    An economic action the tourist nation could apply for reduction the drunk tourist in the resort communities could do an internalization in which the price of alcohol increment with a tax so the tourist will consume less provoking a decrease in the possibilities of trouble.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs in resort communities are getting benefit at the expense of taxpayers because the economic benefit is bigger than the social benefit. The proprietors are gaining more economic benefit than the social benefit because many negative externalities are related with alcohol.

  82. mboadeon 04 Feb 2011 at 9:56 pm

    Hi, Kang San I agree with your last point in which you defend that the proprietors are gaining benefit at the expenses of the taxpayers. As well I agree with your second point but the nations are not willing to increment the taxes because the result will be less tourist visiting their nation.

  83. Lukasz_Zajaczkowskion 05 Feb 2011 at 7:08 pm

    It's obvious that overconsumption of alcohol is a market failure. As the article mentions, the private benefit (MPB) is much bigger than the social benefit (MSB), because "British tourists only consider their own enjoyment (benefits)", which means that they do not care what is the socially efficent output.

    Because the article is about overusing alcohol, this means it's an externality of consumption, and, as mentioned before, because the society has a smaller benefit than the consumers, it is a negative externality of demand.

    In order to reduce the amount of drunken people on holidays, the tourist nations has a few economic options they could do. First of all, they could impose a tax on alcohol, which would slightly decrease the demand, and the social benefits would be much closer to private benefits. Another option would be adverstising responsible drinking of alcohol (which is mentioned in the text). Lastly, there could be limits for consuming alcohol, which would require the tourist nations to introduce something like permits.

    The proprietors of bars and clubs would benefit, because the consumption is huge and people drink as much as they want not caring about the society. The cost of running a bar includes mostly things, which can be bought with money, however if people overuse alcohol, the cost of the society would be people's health or life, because drunken people often can't control themselves.

  84. Lukasz_Zajaczkowskion 05 Feb 2011 at 7:11 pm

    @Issa.echl.f09

    I totally agree with what you said, reading your response gave me some new ideas. I think that raising the minimum drinking age would be the best solution. Even though it is not mentioned in the article what age group of people usually do such silly things, I think those are mostly young adults, between 18 and 21. Raising the drinking age would be a good solution.

  85. Daniella Majlufon 05 Feb 2011 at 9:50 pm

    1. I believe that overconsumption of alcohol is a market failure classified as negative consumption externality. This is because when consuming so much alcohol people tend to do things they may not do when they are conscious, like jumping off a building, or driving at a very fast speed in places they shouldn’t. These types of actions sometimes lead to death or serious damage. So there is a negative spillover because not only does the drunken person get hurt, but other people may suffer because of his actions.

    2. The economic actions that they could do to prevent so much alcohol consumption is imposing taxes on alcohol so that less people are willing to buy it or so that they buy alcohol in smaller quantities. They could also make advertisements like they do with cigarette advertisements, that they show the negative effects on the human body.

    3. The proprietors of bars and clubs in resort communities benefit at the taxpayers they are able to charge more for the alcohol that they sell and they can convince them to but more and more alcohol one they are drunk and can’t think clearly. They also earn a profit from the people that come from Britain to drink. The private cost of running a bar in a place like Malia does not reflect the social cost since they don’t really care what the drunken people are going to do after they exit the bar, the only thing that they care about is earning money, and the more alcohol the tourists buy, the happier the people from the bar are. They do not take into account that they could be sued for any accident. They also have to take into consideration the money that they need to pay for the bar damages.

  86. Daniella Majlufon 05 Feb 2011 at 9:52 pm

    @mboade

    You have a great understanding of what is happening and I like your answer to question number one, in which you state examples of negative externalities that could be faced, like damage to property and riots.

  87. Nicole_Sonderegger_Non 07 Feb 2011 at 2:26 am

    1.Overconsumption of alcohol is a market failure. It could be classified as a negative externality, because it brings about additional costs for society. Private benefits are a lot greater than social benefits, meaning that resources are not efficiently allocated and there is overconsumption of alcohol. Drunk people often have accidents which involve expensive treatments and operations, are a threat on the road, and are a disturbance for other people, which is why the social benefit of drinking is much smaller that its private benefit.

    2. Tourist nations could use the police force to stop tourists from drinking too much. They could enforce a law which prohibits people from drinking over a certain amount of alcohol and if they do, punish them with fines. Tourist nations could also place a high tax on alcohol to try and keep consumers from purchasing alcohol. Tourists would probably continue buying alcoholic beverages despite the price increase, but the amount they consume may be smaller because it becomes too expensive to many drinks.

    3. Proprietors of bars and clubs would make a lot of money at the expense of tourists who would be forced to pay taxes if they want to purchase alcohol. No, running a bar at a tourist location involves having higher social cost compared to the private cost. Bars in popular tourist locations are bound to attract a large amount of costumers, especially at night and during vacation season. This would mean that a bar is very likely to earn large sums of money by serving to so many costumers and so they can easily cover all their costs and even enjoy plentiful profits. However, the social cost involves a large amount of annoying and dangerous drunks. Drunks can disturb residents of the areas simply by being loud and obnoxious, or even by causing damages to property. Drunks also have a high risk of somehow being hurt. This means that the private cost is smaller in comparison to the social cost brought by a bar which serves to tourists who really like to party.

  88. Nicole_Sonderegger_Non 07 Feb 2011 at 2:32 am

    @Daniella Majluf

    Very good thinking about how bars take advantage of their costumers by encouraging them to buy more and more alcohol, when they are drunk and are not thinking about how costly the drinks are. Bars can also take advantage of consumers because they know that their demand for alcohol is not very elastic as the majority of their costumers are people who are on vacation and are seeking to have a great time. This means that proprietors of bars are aware that increasing their prices will not cause much of a drop in demand and rather will increase their revenues.

  89. Fabian_MontoyaFendton 07 Feb 2011 at 6:04 am

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    The overconsumption of alcohol is difficult to solely classify as a market failure. This is because the Utility of alcohol is not as the one of a common product since alcohol is addictive; people are more likely to start buying more and more alcohol. It actually is a very well designed product since the producer enjoys a high partly inelastic demand. At a social level its excess produces trouble.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    There is a limited course of action for this since laws have to apply to everyone, not just the resort communities or a tourist sector. Depending on the current government of the place a tax could be imposed on the alcohol or if there already is a tax to make it higher because this will disencourage its consumption and the funds from the tax could be used as a social fund to cover all troubles from alcoholism.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The owners of the bars and clubs Benefit a lot because they sell the alcohol and usually there all problems happen so the government uses taxpayer funds and resources to pay reparations to this area. So the bars and clubs sell the alcohol and then get benefits to avoid or repair from social issues.

  90. Fabian_MontoyaFendton 07 Feb 2011 at 6:07 am

    @Nicole Sonderegger Norris

    Very good answer, the negative externality is a very good point. next the analysis on why resources are inefficiently allocated is very interesting and helps explain why some taxpayers end up paying for social problems of drunk tourists.

  91. Tomoya_sekineon 07 Feb 2011 at 2:54 pm

    1.It all depends on whose perspective this question is viewed as. From an economists’ point of view, the overconsumption of alcohol would be a market failure due to the fact that people are causing spillover costs for society and also the “police forces” of the nation. It would be classified as a negative externality as it causes side effects to third parties. However I personally believe that these people just do not have morals and ethics of what a responsible human being would have. So even though this article was based on British tourists, all tourists in general obviously have vacations and only consider their “own enjoyments”, just specific people have no control over themselves, not ALL “British tourists”.

    2.If the tourist nations were ‘serious’ about cracking down on drunk tourists, one of the actions they could take is to just ban alcohol entirely as that would cut down the problem (even though the downside is that the tourism industries and several firms would lose money due to the loss of customers). Another action could be the government putting high tax on alcohol, this would increase the price of alcohol and therefore consumers would try to avoid the consumption of alcohol due to the high price (however high price would mean low demand for the product in which the providers/sellers would not make a lot of profit). Another action (mentioned by Alex Telford) could be the tourists getting harsh punishments for any vandalism, troubles they make (Ex: In Singapore, caning is a form of punishment. It is very harsh but this is why the crime rate is low and a lot of people avoid trouble).

    3.Proprietors of bars and clubs would benefit at the expense of the taxpayers, as they would be able to make more profit due to the increase in price of their products. The private cost of running a bar in places like Malia, Greece, and other parts of Europe does reflect the social costs as explained in the article above. Some of the examples of social costs due to excessive alcohol consumption are the cost of healthcare (in some situations – fights, alcohol poisoning, etc), security/police (because of drunk tourists in Europe, the police department must be aware and careful of nearby bars that may cause further trouble than the arrest), and generally, public display of affection is disturbing for many people.

  92. Tomoya_sekineon 07 Feb 2011 at 3:02 pm

    To: Javier Alonso Martinez

    To the response of your second question, I believe that this article has nothing to do with teenagers and underage drinkers. It just mentions "British tourists". Even though the nation does allocate police control to main streets and such, that would be the social cost itself wouldn't it? Also if there is more patrol and control over the main street, I would imagine all the "teenagers" or drinkers to go elsewhere, where there is less security. And the fact that so many "teenagers" carry 'fake' IDs would counter your argument.

  93. Francisco_Jose_Carilon 07 Feb 2011 at 9:28 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Of course it is, it is a consumer negative externality, where, thanks to an irresponsible consumer, other consumers (that have nothing to do with him) are affected negatively. It is consumer externality because the consequences do not affect suppliers, (unless people start going to work drunk).

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The rest of communities could impose a limit on the amount of alcohol they can consume. That occurs now, there is a limit on the amount of alcoholic beverages people can consume on a plane. If this does not work they could increase the price of alcohol. They could even create severe laws that punish this type of people.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    They are getting increased profits from these tourists. I don't think that the private cost of running a bar reflects on the social cost. This is because the bar is not the one doing irresponsible things, its their costumers. In some situations it may be true, a bar can be a good business.

  94. Francisco_Jose_Carilon 07 Feb 2011 at 9:32 pm

    To Fabian:

    Regarding question number two.

    I support your argument, a change on laws is something difficult to do. Maybe creating a contract that they have to sign upon entering the country regarding alcohol consumption may work. If they disobey this contract they would be subject to a special set of laws. I don't know if that is legal but it may be a solution.

  95. Juan_Manuel_Arguedason 08 Feb 2011 at 3:48 am

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Overconsumption of alcohol is indeed a market failure. It can be classified as a negative externality. It is indeed a market failure because of one main reason. This is because if there is one person that drinks too much in a bar, it affects the other people in the bar.

    The economic actions that they will take in the resort communitites where most trouble occurs is raising the prices of alcoholic beverages. This would make the consumption be much less, and have less drunk tourists.

    They are benefiting at the expense taxpayers from the other parts of the toursits nations by not raising the prices for the alchololic beverages, or even offering more and more to these tourists that what they like is to get drunk.

    The private cist of running a bar in a place like Malia, Greece does not relects the social cost because there the prices won't make a change in the conomic stability of the country, this is a very rich country where this type of things won't affect.

  96. Juan_Manuel_Arguedason 08 Feb 2011 at 3:57 am

    @ Horia Stanescu:

    I agree with your points, but its "easier" to classify it as a negative externality. Lets remaind that a negative externality is when an action taken by an entity negatively effects an uninvolved 3rd party. In this case, there woul be a tourists who drinks a lot in a bar, then this would be affecting the other people at the bar. :) I see it like this, it's just my opinion.

  97. tiffany_williamon 08 Feb 2011 at 5:21 pm

    It is a market failure as it gives bad effects to consumers. This will encourage other people bar to be involved in drinking which is not healthy at all.

    The rest of communities could impose a limit on the amount of alcohol they can consume. It can be done by lowering down the numbers of alcohol drinks purchase from suppliers, imposing several laws and many others.

    Their profits are increasing as a result of the tourists. It's not a social cost in running bars. And bars are not categorized as a bad place to go. As long as the business is doing its responsibility and it will be fine.

  98. tiffany_williamon 08 Feb 2011 at 5:21 pm

    @Juan_Manuel_Arguedas_Rodriguez

    I love your responses :)

  99. cleoon 09 Feb 2011 at 2:42 am

    Discussion questions:

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as? Overconsumption of alcohol is a market failure, and it would be considered a Negative Externally of consumption.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs? They could ban alcohol altogether, but this wouldn't be a very good solution because the market for alcohol would disappear and would cause a loss of jobs. They could also impose taxes and use the money to counter the the damage caused.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain. The proprietors of bars and clubs in resort communities are benefiting because the tourists that buy their alcohol do not pay taxes, and therefore do not have to pay for the damage, the cost of which is handed down to the taxpayers. The private cost of running a bar in Greece does not reflect the social cost because the bar pays little to no tax, so the expenses of drunk tourists are once again forced onto the citizens.

  100. cleoon 09 Feb 2011 at 2:47 am

    @ tiffany_william

    i do not agree with your third answer. there could easily be social costs if people in bars get drunk and go off and get into a cart accidents and hurt people or public property/

  101. Talia_Greeneon 09 Feb 2011 at 3:12 am

    1. It could be considered a negative consumption externality, as the overconsumption by the consumer goes beyond the consumer and harms the public.

    2. They could limit or tax the sale of alcohol to discourage the overconsumption.

    3. The proprietors benefit from the extra sales from the business while the taxpayers have to pay the costs for the drunken behavior. The private costs are probably significantly less than the social costs of the hospital visits, law enforcement, and other costs.

  102. Talia_Greeneon 09 Feb 2011 at 3:14 am

    @ Cleo:

    I agree with you that banning the sale of alcohol would probably not be a good idea. In addition to cutting the jobs, in significantly increases lawlessness because people will drink anyways, as seen with Prohibition. I like your idea about using profits from taxes to pay for damages. It’s very practical.

  103. Merve_Akpinaron 09 Feb 2011 at 9:06 pm

    I cannot deny that alcohol consumption could be stated as market failure. It can be negative externality in consumption. To be clearer, alcohol is over consumed. Therefore it jumps over the optimum level which is accepted by the society. It caused a spillover effect which is negative.

    The government can put a tax which must destroy the inelasticity of the alcohol. This indirect tax will make alcohol very expensive. Therefore people will not be able to drink more than two or three drinks per a night. That could be an effective way in order to divert people; however the tourism sector will be affected in a bad way. The government can also make negative advertising, but it is not an aversive way.

    Because bars and clubs in alternative communities are likely to be fully burdened, especially during holiday season when many tourist arrive, therefore, their profits made is extremely large. However, the profits they make do not reflect the total social cost. The negative externalities brought by the over-consumption of alcohol in these clubs and bars are costing massive amounts of government payments.

  104. Merve_Akpinaron 09 Feb 2011 at 9:15 pm

    @ Cleo & @ Talia

    I agree with you about banning the sale of alcohol. It causes several problems in terms of economics and social life. unemployment will take place and people gonna drink anyways. Also how can we talk about freedom while we ban? I must add that; we live in a capitalist world. And capitalism is the advanced version of liberalism. No one can deny that liberalism contains the idea of freedom and individual economy. Therfore; capitalism-> liberalism->freedom, individual economy. Therfore no more banning, no more government intervention

  105. Asucan_Odcikinon 10 Feb 2011 at 12:49 am

    1) Of course it is an example of market failure. And it can be classified as negative externality as it causes additional costs to the society. There is an obvious overconsumption of alcohol which brings damages to the society with high costs. There are a lot of accidents which require expensive operations meaning additional costs and not having any social benefits at all. So it is an obvious market failure by not being able to allocate the resources efficiently causing overconsumption.

    2) I think if we should do something economically to stop this trouble about alcohol the government should apply high amounts of taxes to the alcohol prices. This can decrease the amount of alcohol that is being sold at the markets as the price is becoming very expensive. Of course tourist will not stop buying alcohol but because of the high prices the amount of alcohol that they can be able to purchase will decrease. Also there can be some legal actions that can be applied on selling alcohol like restricting the amount can be sold to a person. So that people can only get little amount of alcohol which is not dangerous for the person who get it and for the other people’ lives.

    3) Proprietors of bars and clubs make loads of money as they have a lot of costumers who are tourists and buying a lot of alcohol by paying taxes. So they are benefiting at the expense of taxpayers. I think the private cost of running a bar in a place like Malia, Greece is a lot less than the social cost that a bar can have. Because as it is clearly stated in the article a very popular tourist place can sell a lot of alcohol and make loads of profits that can cover its private costs but when it comes to social costs like disturbance of people by drunk costumers and even drunk people destroying the place and hurt others or themselves cannot be covered easily. So I think private cost of a bar is much less than a social cost of the same bar in a very touristic place.

  106. Asucan_Odcikinon 10 Feb 2011 at 1:01 am

    @Juan_Manuel_Arguedas_Rodriguez

    I agree with you about your answers to the first and second questions. I think your third answer is very interesting as you answered it in a very different point of view. I did not think of economic stability and country's richness when I first read the question but after reading your answer, you could be right about that if you stated it two or more years before as you stated prices won't affect the country because of the richness. But I think we should not make any generalizations about a country especially about Greece in these days because the economic situation of Greece is not bright as you think as I read and follow from the news and articles.

  107. Ozge_Elif_Ozeron 11 Feb 2011 at 2:33 am

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes, the overconsumption of alcohol is a market failure, because it results in some extra costs to the society and even to society. Thus, we can classify it as negative externality. For example, there are a lot of car accidents because of the overconsumption of alcohol and it cost a lot of expensive stages to recover damages to everything.

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    To stop that, government can apply high taxes on alcohol. It can decrese the amount of alcohol that is sold. People are not willing to pay high prices, so there will be less people who are consuming alcohol and they will consume it less.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs is to benefit from the tourists which are not paying taxes. Thus, private cost of running a bar in a place like Malia, Greece does not reflect the social cost, because this place is not a popular touristic place which can cover all of its cost by the tourists.

  108. Ozge_Elif_Ozeron 11 Feb 2011 at 2:35 am

    @merve akpinar

    Merve I like the way you reflected real world in an obvious way in your comment to Talia and Cleo. I agree with you that we are living in a capitalist world and it is a version of liberalism.

  109. Bahar Erdo?duon 11 Feb 2011 at 9:31 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes it is an example of market failure. It is not only market failure, but also it is in the title which is negative externality because of high prices of the alcohol. In the society there are a lot of people consuming alcohol and it has a bad affect because of health and high cost. There is no benefit which is coming from too much alcohol consuming so that it is market failure.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    There can be high amounts of taxes which is applied to the alcohol prices and it can decrease the amount which is consumed. If this doesn’t stop the tourists then there can be strict rules. For example; a person can only drink … amount of alcohol and more of that amount won’t be sold to people. Other thing is if someone makes a trouble because of high amount of alcohol which she/he consumed there should be serious legal actions. After that people can know their limits and consumption may decrease.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs in resort communities benefiting from the tax payers from other parts of the tourist nations, because when they buy alcohol they also paying for the taxes as it is named.When proprietors have a lot of costumers they have a lot of profit from that.In my opinion,the private cost of running a bar in a place like Malia, Greece is lower than it should have social cost,because people are having too much alcohol and after that there are a lot of people who don’t know what they are doing and they generally hurt others, themselves or damage the place. Private cost is very high because in the article it is mentioned that tourists prefer that bar.

  110. Bahar Erdo?duon 11 Feb 2011 at 9:33 pm

    Asucan,

    I agree with you about second question. There should be limits for people to have alcohol and price of the alcohol should be increased.

  111. Mehmet_Mert_Sumaon 12 Feb 2011 at 6:43 pm

    1. It is a negative consumption externality. The suppliers don't get affected by the behaviors of the consumers. On the other hand, over- consumption of alcohol has an impact on the society. We can consider the two women who tries to get some fresh air in the airplane as an example. Their behavior made the pilot to land in Frankfurt and affected the other passengers.

    2. The government might ban the consumption of alcohol, increase the taxes on alcohol, increase the legal age of drinking to prevent young people from having a drinking habit. Lastly, severe punishments may be given to the vandals.

    3. The owners of the clubs and bars benefits the expense taxpayers. For example, if a drunk person destroys the chaise lounges in a public beach, then the citizens will be paying the taxes to cover the costs, not the owners.

  112. Mehmet_Mert_Sumaon 12 Feb 2011 at 6:47 pm

    @Daniella Majluf you are right that the proprietors don't take the social cost into account. Their only concern is the private cost and their profits.

  113. Huanni_Wuon 13 Feb 2011 at 3:33 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes. The effect brought by overconsumption of alcohol exists as negative externality since the social costs are pretty large, damage to property, arrests, accidents, etc. This makes marginal private benefit of alcohol consumption excess the marginal social benefit, representing an overallocation of resources towards alcohol in tourists towns. This is a type of market failure with negative externalities initiated in consumption but received in production.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    A direct way to reduce the consumption of alcohol is to introduce an indirect tax onto alcohol, resulting in a significant increase in price. However, it would be argued that this measure would damage local businesses. In my opinion, the government could set quota of alcohol being sold to the tourists in order to control the consumption of alcohol in a rational range, instead of turning alcohol to a luxury good.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The bars and clubs receive revenue from holiday drinkers, but they don’t need to pay for the extra social costs brought by the consumption of alcohol which includes damage to public property, distribution of police force, etc. These costs are spread by taxpayers. The private cost of running a bar does not reflect the social cost.

  114. Huanni_Wuon 13 Feb 2011 at 3:43 am

    @Sean Isaacson

    Your idea is an innovative one. Having Hotels specifically designed for people who like to go clubbing would definitely decrease the externality brought by drunken behavior and avoid an damage to the nightclubs business. Also, regulaitng the spirits levels is a good way to prevent people from getting too drunk. I think increasing the legal age of drinking is also a good way of decrease drunken behavior.

  115. Muhammet_Murat_Sekbaon 14 Feb 2011 at 9:16 am

    1) Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a market failure because the consequence has negative effects on the society. Sometimes, drinking alcohol can be beneficial for the individual, because there can be some people who are affected by lack of alcohol – personal positive externality – and this drunkenness can cause negative social externality.

    2) If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If the tourist nations were serious about cracking down on drunk tourists, they can limit the sale of alcohol. It would bring marginal private benefit and marginal social benefit. As a result of this there will not be overconsumption of alcohol. Moreover, banning the sale of alcohol also may have a negative effect.

    3) How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The bars and clubs in resorts are likely to be full, especially during the summer season, when many tourists come to there. At that time the profit that they make is really huge amount. Bu the profits that they make doesn’t reflect on the social cost.

  116. Muhammet_Murat_Sekbaon 14 Feb 2011 at 9:20 am

    @ Bahar Erdogdu

    I agree with your second answer. As you said increasing the taxes will have effect on the consumption of alcohol.

  117. Gunnhildur Ómon 20 Feb 2011 at 4:00 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    This overconsumption of alcohol could be classified as a form of market failure since it affects the society. It would be said to be negative externalities in consumption. The overconsumption has negative affect on the society and they also create cost to the third party (the society). Examples of those costs and affects are the crime rates, other damage that drunken people cause, hospital costs and in some cases even death. The reason for why this is classified as a market failure is that the marginal private cost, which is the alcohol consumption exceeds the marginal social benefit curve. This means that there is not allocative efficiency, hence market failure.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If the tourist nations were to try to reduce alcohol consumption of tourists in the area they have several options. One would be negative advertisement as is said above in the article. Another, I think more effective way is to put high taxes on alcohol. It would perhaps cause people to drink less because it is more expensive. The burden of the taxes would only affect the consumers of alcohol and it is likely that the introduction of those taxes would reduce the costs for the environment, when the consumption of alcohol is lower, however it is not likely that it would eliminate it. This would however be a negative move for alcohol producers in the area since demand for their products (alcohol) would decrease.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs try to attract customers and the demand for alcohol is high in the areas and in many cases there is excessive drinking. The sellers of alcohol in the area compete in the market for alcohol and might for example offer lower prices to attract more customers. They do this for their own benefit, to earn more profit. However if they are earning more profit it means that there is more alcohol consumption going on and the excessive drinking causes costs to the society. Those are costs such as hospital stay, damage to public property and other. Therefore it is important for the government to intervene to fix this problem, the society should not suffer for private benefits.

  118. Nathan R. and Nathanon 25 Feb 2011 at 10:16 am

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes, overconsumption of alcohol is indeed a market failure, as the market fails to regulate itself and to make itself reach levels that suit both society and the private consumer. Since the benefits of over-drinking are much higher to the private consumer then to society. It could be classified as a negative externality of consumption as it is the fact that drunk Brits drink too much that is causing negative effects on the society of their vacation spots.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Either tax or ban the purchase and consumption of alcohol in the most touristic resorts.

    They could also follow the British Consulate's example and create negative advertisement campaigns.

    They could increase legal sanctions against offenders and repeated offenders.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain

    The propietor of the bars sell a lot more alcohol and therefore make more profits then bar-tenders in other parts of Greece. But, this increased consumption of alcohol also has a heavy burden on other tax-payers as their needs to be a bigger and better equiped police force, as well as emergency medical assistance in those areas to deal with all the inebriated tourists. Since in most countries such services are paid by tax, then becasue of the abundance of alcohol in Malia, people in Athens have to pay higher taxes to deal with that increase. Therefore the private cost of running a bar is a lot lower then the social cost, creating a negative externality of production.

  119. Nathan R. and Nathanon 25 Feb 2011 at 10:20 am

    Referring to question 2:

    Another way that the Greek authorities could lower the level of alcohol consumption is tourist resorts is by regulating, such as through official licences and taxes the number of bars in those areas. Less bars means less booze available, and the higher cost of opening a bar will also increase the price of the booze itself.

  120. Nicholas Milliganon 25 Feb 2011 at 4:40 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    The overconsumption of alcohol is a market failure, as it represents a cost society pays as a result of Britons drinking too much. Thus, it represents a market where the private benefit is much higher than the social benefit.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The nations could increase sales taxes on alcohol so that less is consumed. Also, the nation could consider running a so-called "booze bus", a vehicle that deals with rowdy tourists so that ambulances can focus on more worthy cases. Finally, the British government should be forced to pay indemnities for damage caused by her citizens; she would then have an incentive to control her citizens.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Obviously, owners of establishments that sell alcohol to foreigners profit on a financial level, while other businesses, individuals, and institutions are forced to foot the bill for damages.

  121. Markel Zuritaon 26 Feb 2011 at 6:08 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    – Overconsumption of alcohol is a market failure and can be classified as a negative externality of consumption since it creates costs to society. This is because the benefit enjoyed by consumers of alcohol is greater than the benefit enjoyed by society.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    – If the tourist nations were serious about cracking down on drunk tourists, they could price discriminate by charging tourists higher prices than for locals. This would shift the marginal private benefit curve closer to the point where marginal social benefit equals marginal social cost since the tourists would have to pay more money for the same products locals due which would therefore reduce the benefit of getting as drunk.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    – Proprietors of bars and clubs in resort communities are benefiting at the expense of taxpayers from other parts of the tourist nation because they are profiting from the alcohol being bought by tourists. The private cost of running a bar in a place like Malia is therefore much lower than the social cost because society pays taxes for the damage tourists are doing. The production of alcohol by bars and clubs in resort communities creates a negative externality of production since they are externalizing their costs by creating spillover costs to society which must pay taxes to pay for medical services the tourists receive when inebriated.

  122. Christian Camarilloon 28 Feb 2011 at 12:49 am

    1. I believe that overconsumption of alcohol is a market failure. It can be classified as a negative externality. The tourists’ overconsumption of alcohol has caused social costs to rise because money has to be spent on them by the police force and other agencies from their home country. They are affecting not only their country but also the country that they are visiting.

    2. The nations can place a higher tax on alcohol as an economic strategy to reduce tourists getting drunk and coasting everyone money. The higher tax will most likely reduce the amount of alcohol consumed by the tourists.

    3. They are receiving more money, which is beneficial in a lot of ways. The private cost of run a bar can reflect the social cost because if future tourist read about one bar in Greece always having problems with drunks, then that will give the tourist a second thought on whether or not to go to Greece.

  123. Christian Camarilloon 28 Feb 2011 at 12:53 am

    @Issa.echl.f09

    Great answer for the second question. Putting quotas and raising the drinking age will definitely lower the consumption of alcohol which will produce less and less drunks.

  124. Ashinion 02 Mar 2011 at 12:59 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a market failure; it can be classified as a negative externality. Overconsumption of alcohol could be harmful for the society, it could create alcoholism and alcoholics could cause much damage for the society.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    A tax could be levied on alcohol beverages. Also several minors could be prevented from drinking if they carried out a thorough check on the ID of the tourist.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Bars and clubs are benefiting by selling alcohol to tourists. The private cost is less and the social cost is more as the society has to bear with more alcoholics around it could increase the number of cases of drunk driving and accidents.

  125. Ashinion 02 Mar 2011 at 1:01 pm

    @ Christian Camarillo

    as an economics strategy it is a wise choice to levy a tax of alcohol

  126. Beni B.on 02 Mar 2011 at 10:51 pm

    Was quite interesting to read the article and it's nice how it shows that externalities are present in such different areas.

    1.

    Overconsumption of alcohol is a market failure. The overconsumption of alcohol produces negative externalities on the market coming from the consumption.

    2.

    The tourist nations could take a few different actions to decrease the amount of drunk tourists in some of the resorts.

    One strategy would be for the government to increase the taxes on the alcohol in those resorts, in order to lower the supply of alcohol but also to lower the demand for alcohol. Though that approach could give the bars and clubs in those resorts some trouble because it lowers their demand and supply and therefore revenue.

    Another strategy would be to increase the awareness of the dangerous side-effects of the overconsumption of alcohol to the British tourists, which is actually what is done now. This can be done by advertising the fact that the tourists should drink responsibly.

    A different approach would be to ask the tourists that actually cause costs to the economy through their overconsumption of alcohol (e.g. arrest, hospitalization, vomit in the corners needed to be cleaned up…) to pay those costs with their own money. This way the government would receive the money back it has to spend on some of the tourists which over-consumed alcohol and the costs wouldn't fall on the native tax payers.

    3.

    The owners of the bars and clubs charge the consumers only what they need to cover their own costs of the alcohol and running the club and even gain a profit. For example though, if the consumer drinks too much alcohol in the club and has to vomit all over the street outside after leaving the club and possibly even be hospitalized, the cleaners have to clean the mess on the next day, which are paid by the government (tax payers) and also the time in the hospital might put costs on the government (tax payers) – the Club won't be charged any money to cover the government's costs generated by their consumer. This way the real social cost, which includes cleaning up the mess and the hospitalization of the consumer, will be partly paid by the (social) tax payer's money and exceed the private cost of the bar which only includes the hosting of the consumer and the ingredients bought for the consumer's drinks.

  127. SuyeonSoon 07 Mar 2011 at 3:03 am

    Overconsumption of alcohol could be considered as a market failure, as the economic behavior (consuming alcohol) causes many side effects in the society and has so much social costs, such as crimes caused by drunken people and such and police force needed to settle the situation down. The type of this market failure would be involving moral values and degree of self- control of consumers, because it is totally up to individual’s decision to control one’s drinking.

    If the government wants to reduce the number of drunken tourists, the most important thing for them is to limit the sale of alcohol. The best way would be imposing high tax on the drinks so people would not buy drinks. However, this would affect the revenue of resorts, as the amount of alcohol they could sell would be decreased.

    The private cost of running restaurants, bars and such would not be that high in nations that tourism is developed, because the government would support those business since it is one of the most business in the nation. The social cost, however would be really big because as this article states, more selling in bars means more drunken people and this would eventually led the increase of social costs.

  128. SuyeonSoon 07 Mar 2011 at 3:08 am

    @Beni.B

    I think your explanation about the question 3 explains the economic principles involved in this situation really well.

  129. Gökçe G&on 18 Mar 2011 at 8:41 am

    ? believe that we can therefore determine that alcohol is Price inelastic.What Wilhelm said is an interesting revelation. He mentions that a tax, bringing up the price of alcohol, brings about a minimal or negligable response in the quantity consumed.

    However, there is a possibility that alcohol too could be a giffen good. It is possible that even with a tax levied on it, alcohol still represents a small proportion of people’s income. To add to this, the private benefits of consuming alcohol in certain societies may be so high that an increase in price does not serve as enough of a disincentive to outweigh those private benefits.

    I can only propose that the tax be made so high that alcohol becomes a luxury good in light of Wilhelm’s evidence. However, for any government taking this measure there would undoubtedly be severe political repurcussions

  130. Nesibe Zirzak?ranon 18 Mar 2011 at 9:12 am

    Yes, overconsumption of alcohol is an externality. It is an negative externality. The consequences will be harsh on society. There will be health costs of it and also public places will be affected too. Drunk people will cause noise and unwanted situations to happen in public place which will disturb people.

    Sure they will limit the sale of alcohol which will bring the marginal private benefit back as the same level with the marginal social benefit and make sure that there is no overconsumption of alcohol, at least on the hotel’s premises.

    Bars in resort places are getting low taxes than it is in popular areas that attracts tourists. Because since the demand is high in bars in touristic places, government want to put a limit on consumption and encourage other bars to make business to. By this way, economy will flourish.

  131. AydaKansuon 18 Mar 2011 at 3:31 pm

    1.)Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a one of the negative consumption externality and so market failure, the reason why it is a market failure that it just affects the consumer, not the producer.

    2.)If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Raising the tax up for alcohol will be wise for them to take as an economic action. So that drunk peoples rate would be reduced, because they may not want to give that money to a certain product. so the damage to peoples health would be fixed in a way.

    3.)How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Tourist means a great benefit for those people who run bars or pubs, but it also affects community outside the bar. So that shows private cost does not reflect the social cost

  132. Ece_Erdemon 18 Mar 2011 at 3:47 pm

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    ——————————————————————————–

    1. Yes it is a market failure and a negative externality. It does not affect the producer but it affects the consumer. Alcohol consumption will cause for people who use it to act violently, or if they are using cars it will cause a traffic problem. Therefore it will also affect the innocent people and the environment as well.

    2.I believe that enormous taxes on the alcohol can reduce the consumption, but it is addictive so people can pay for it anyway. Or there can be negative advertisements about the alcohol.

    3The bars will get low taxes because the demand for those bars are too high and the government want to benefit from it. So that the economy is going to be developed if there is low taxes in the bars.

  133. [...] To read more about the external costs of over-consumption of alcohol, read the blog post: Negative Externalities of Consumption: Britain’s Inebriated Masses  [...]

  134. Charles Roberton 28 Nov 2011 at 6:57 pm

    Well, obviously people on holiday in Greece are going to drink too much. However, i think it might rather be a social problem rather than an economical one. For England, it's rather a reputation problem than an economic one, since i doubt the British government is paying anything towards these people. Insurances and private consumers might have a hole in their pockets when they need an operation or need to be bailed out of jail, and that might become a financial problem. Then, i think that there is a welfare loss. However, advertising responsible drinking will not dissuade a British group to drink less, because their purpose for coming to Greece is mainly to drink. Raising a tax will annoy the locals more for having to pay the price plus tax for a beer than the tourists themselves who are going to spend a lot anyhow. Anyways, everywhere that there will be young tourists, there will be drunk tourists, whether it's in Greece or anywhere else. Therefore, if this is a market failure, the failure can be seen everywhere and as far as tourists go, i'm not sure a tax or advertising will change anything if not increasing the welfare loss. As a matter of fact, i dont think anything will.

  135. Prahnavon 28 Nov 2011 at 9:05 pm

    Well, I think that was slightly pessimistic concluding approach to the problem. Looking at the situation in basic terms, if the price of a good increases, in this case alcohol, then according to the law of demand, the quantity demanded should decrease. When a tax is placed on the production of the alcohol, then this will increase the price of consuming alcohol. Naturally, a higher price will discourage people who would once have considered consuming it. With them out of the market, the amount of externalities faced by society would reduce. You make a good point mentioning that locals will have to pay more money too when they want to consume alcohol, but if they are truly annoyed by the foreign, British drinking in their country, then they should be willing to put in a bit of sacrifice for the greater good. Weighing the local peoples marginal cost to marginal benefit, they reap more benefit than cost, with the tax in place. That's my opinion to the situation…

  136. Serraon 29 Nov 2011 at 9:40 am

    I agree with Prahnav and would just like to include the fact that although drinking alcohol is not good for the individual because the lower the price of the alcohol, the more people will drink it. Like Prahnav said if there was a tax on a bottle of alcohol than the demand would decrease. However this would not benefit the society because if people stop drinking they will be healthy meaning that they will live longer. People paying for the healthcare and not drinking will collect the accumulated benefits in the longterm whereas people who drink alcohol will die younger than those who don't and they will not be able to collect their benefit which means that the society will benefit. Therefore we need to have people always drinking alcohol as it benefits the government in the longterm (government can use the accumulated benefit which couldn't be collected to improve services).

  137. Sofieon 29 Nov 2011 at 5:51 pm

    I agree with Chuck to an extent. Naturally, vacationers are going to drink, be it in England or any other vacation spot. Cracking down on the alcohol consumption by imposing a tax will help to a certain extent, however, if the tax is too high, it will have the opposite effect. If the tourists now have to pay a higher price for alcohol, they'll soon find another destination with lower prices and travel there, instead. On one hand, this may be good for the social benefit of the people, but now a primary source of money is eliminated, as stated in the post. Overall, I think government intervention in the form of police is more logistical than a tax. More police = less riots and ruckus while maintaining stable amount of beverage consumption and steady income.

  138. sophie zhouon 02 Dec 2011 at 5:19 am

    • Is over consumption of alcohol a market failure? If so, what type could it be classified as?
    The over consumption of alcohol is a market failure since it is a negative externality of consumption. It is negative for the consumers rather than the producers.

    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    High taxes imposed on alcohol would tan efficient solution to the problem.
    This is because when high taxes are imposed, it would decrease the quantity demanded. Another solution would be to provide a stamp card that people must show before they are served alcohol. Just like when people have to show their ids to reveal they are of legal age to drink, people must show their stamp card revealing how many drinks they had that day since the stamp will reveal the date. If the card is lost, stolen or tampered with, that person would not be able to drink.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    Proprietors of bars and clubs in resort communities benefit at the expense of taxpayers from other parts of the tourist nations since they are the ones making money from selling alcohol. However, these drunkards often causes damages to public properties and increase the number of law enforcements, which would result in higher ta xes.

    • Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    Yes. When bars like the ones in Malia, Greece only cares about the bottom line, they would sell large quantities of alcohol to tourists, and often result in high social costs like damages to public property.

  139. sophie zhouon 02 Dec 2011 at 5:23 am

    By reading your third comment, I had a clearer picture of the social costs of alcohol consumption by tourists and make me think that the government should take a more active role in decrease these social costs.

  140. Sam Jowetton 04 Dec 2011 at 5:51 am

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes the overconsumption of alcohol is a market failure. The consumption of alcohol create negative externalities for the greek society.

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    They could put huge taxes on alcohol, raising the price of alcohol and therefore reducing the quantity demanded. They could also make laws and amend fines for people behaving really inappropriately in certain areas.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs are benefitting from these situations as there only motive is to sell the most alcohol possible to get the biggest total revenue. However this is at the expense of the taxpayers, who are indirectly paying for the damage made by the drunk people. With the government spending there money on this, the taxpayers receive less social benefits (new roads, hospitals…). Yes the social cost does reflect the social cost in some way. The more incidences people here about in Greece bars and clubs, the less tourist will want to spend there holidays here. So the more social costs there are, the less private benefits there are.

  141. Sam jowetton 04 Dec 2011 at 6:01 am

    i agree with all you answers. i did not think of the idea of thoroughly checking al tourists ID's before entering the club or bar, but definitely agree with it! However I do think that the more people hear about tourists getting completely drunk in greek bars, the less tourists will want to spend their holidays in Greece. The private cost does reflect the social cost.

  142. Alexandra Lifon 04 Dec 2011 at 7:35 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as? Yes overconsumption of alcohol would be considered a market failure because alcohol is a demerit good and overconsumption of demerit goods results in market failures. It would be considered a negative externality.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs? They could impose huge taxes on alcohol in those resorts making it difficult for tourists to purchase large amounts of alcohol, thus reducing consumption of alcohol. They could also increase awareness of the dangerous side-effects that come with overconsumption of alcohol.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? The proprietors receive profits from selling a lot of alcohol but they aren’t responsible for the repercussions that their alcohol may cause; for instance damage to the public property of the nation; instead the taxpayers are forced to pay for repairmen.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Yes it does reflect the social cost, because the main goal for the bars is to sell large quantities of alcohol to tourists; the private cost of running a bar is much lower than the social cost; because the society has to pay higher taxes to cover the damage that the tourists are doing, thus the production of alcohol is creating a negative externality of production.

  143. Alexandra Lífon 04 Dec 2011 at 7:44 pm

    Hi Gunnhildur, I agree with your points! I especially agree with your suggestion of imposing high taxes on alcohol; as it is a demerit good anyway and the bar owners aren't really taking any responsibility in the repercussions of the alcohol. Especially since the tourists are having such negative externalities in consumption by purchasing the alcohol, the society really needs to create stricter rules so their own taxes don't have to increase so they can pay for the damage done by the tourists. Well constructed and informative post, very nice!

  144. tdeol2on 05 Dec 2011 at 2:24 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    The overconsumption of alcohol is definitely a type of market failure because it creates spill over effects. These are in the form of costs created by the consumers which would mean that this is a negative externality in consumption.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The government in these nations could take a few different approaches. They could create advertising campaigns against alcohol, but I doubt that would be very effective. Governments could impose a tax on firms that produce alcohol in their nation. This would be the best solution because since alcohol is an inelastic good, the tax would create greater revenue for the government and at the same time tackle the problem of market failure by achieving allocative efficiency.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    Proprietors of bars and clubs in resort communities benefit at the expense of taxpayers from other parts of the tourist nations since they are the ones making money from selling alcohol.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    Yes it does, the spill over costs might be reflected in the damages to property and these would have to be paid by the private firms themselves and not the consumers.

  145. tdeol2on 05 Dec 2011 at 2:29 pm

    I thought you mentioned an interesting point about how the money collected from taxpayers would go to police forces that help maintain order. I also really liked how you explained that even though there can be measures taken to reduce the overconsumption of alcohol, they would not be very effective as they would decrease the satisfaction and take away the motive for tourists who go on holidays.

  146. lzhang2on 05 Dec 2011 at 7:15 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Overconsumption of alcohol is a market failure. It is classified as negative externalities of consumption. Because the consumption of alcohol creates negative effect on a third party.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They can ban the selling of alcoholic drink in resort communities. The complete elimination of alcohol will possibly reduce the number of drunkards, hence, problems.
    Taxing the alcohol can reduce the supply of alcohol, and possibly the consumption of alcohol. The increase in prices of alcohol will also decrease the demand for alcohol.
    The government can create posters or slogans to educate people about the negative effects of consuming alcohol.
    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The proprietors of bars and clubs in resort communities gain a lot of profits from selling alcohol. They are not responsible for any welfare loss of the community or people. They are not responsible for any unrests created by the drunkards. They only care about the profits. Therefore, the private cost does not reflect the social cost.

  147. lzhang2on 05 Dec 2011 at 7:27 pm

    There are other options the government could possibly take to reduce the negative externalities by banning the product, although there are problems such as the emergence of black market and a loss in tourism.
    I agree with you that the proprietors of bars and clubs are not really affected by the drunk people.

  148. morpanaon 05 Dec 2011 at 7:42 pm

    1.It is evident that the British hooligans are consuming too much alcohol inflicting a cost on the society they are visiting through police forces, destruction of property etc. Due to this negative externality of consumption, the marginal social benefit must be significantly less than the marginal private cost. Therefore the market must be failing to allocate the socially desirable amount of the resources towards the product, and therefore is a market failiure.
    2.The governments could take drastic measures of taxation of the products or legislating restrictions to the quantities of alcohol available.
    3.The proprietors are exploiting the tax payer money of the citizens around the country because the input of the society to keep the places from falling apart allows the excessive consumption of alcohol sold by the proprietors to go on. Very possibly if the proprietors were forced to pay for the damage caused indirectly by them since they are responsible for the state of inebriation of their customers, the businesses would collapse.
    Another way to think about it would be that if the customers were to be taxed to the point that they would actually be paying for not only the good, but the social cost as well, the demand would very likely plummet with the companies once again failing.
    In either case, the bottom line is that the market would very likely not be capable of withstanding the cost they are currently inflicting on the taxpayers, and therefore are exploiting tax payers.

  149. nvirani2on 06 Dec 2011 at 7:47 am

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    The overconsumption of alcohol is a type of market failure. It is a negative externality of consumption. The effects of alcohol is on the consumer as well as the people around them (a third party).

  150. nvirani2on 06 Dec 2011 at 7:48 am

    •If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    If in the budget, these nations could create a secondary police force to monitor public displays of drunkenness. This would help reduce incidents that happen because of overconsumption of alcohol and prevent excessive damage.
    Nations could altogether ban alcohol in certain areas. This would create a black market of alcohol but at least they would only be able to consume it in certain areas without being arrested for the possession of alcohol.

    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    Proprietors don't have to worry about the effect that alcohol causes to the people. They are simply making a profit on alcohol and not worrying about the Marginal Social Benefits of this Negative Externality of Consumption.

  151. nvirani2on 06 Dec 2011 at 7:48 am

    •Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Because of all the damage that the drunk Britons are causing, the private cost reflects the social cost. The taxes will increase based on the fact that the government has to worry about damages that alcohol is causing. In addition, the bar will have to pay for damages to their property if anything were to happen.

  152. nvirani2on 06 Dec 2011 at 7:54 am

    Great response! In addition to the decrease in demand for alcohol when putting a tax in place, it could create a black market for alcohol.
    Government could for sure raise awareness of the negative effects of alcohol. I think we see that a lot here in Vancouver with the ads about drinking responsibly. It helps to keep people under control and remind them when going out to events (like a hockey game) that they need to be responsible.
    I understand your points about how private cost does not reflect the social cost; however, i think in some ways it could. The increase in damage from alcohol could cause the government to raise taxes of alcohol. Just something to think about.
    Thanks!

  153. Jamie Owenon 06 Dec 2011 at 4:56 pm

    1. Is the over consumption of alcohol a market failure?
    Yes, i would say it is and that it is a negative externality of consumption as it effects others around the drunken holiday makers.
    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    They could tax the alcohol meaning that less would be able to be bought as it would increase the price. Although completely banning it would mean it would be harder to get so the market would fail.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    No because the tourists who get drunk and then wreck the place do not pay taxes in that country so it is not a beneficial scheme. So the cost of the damage is put on to the countrys tax payers.

  154. Jamie Owenon 06 Dec 2011 at 5:00 pm

    To Merve Akpinar
    Yes but wouldnt banning alcohol mean that it would be harder for the tourists to get it. And there fore reducing the problem and numbers of drunken tourists. And people wouldnt be able to drink anyway if there was no alcohol easily available. Just a thought

  155. bhejaichon2on 06 Dec 2011 at 5:45 pm

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    I do not believe that overconsumption of alcohol on the British level is a market failure. While there are costs to popular consumption of alcohol, I don't believe excessive demand for alcohol will create a breakdown of the market and cause it and the companies connected to fail. I believe there will always be a demand for alcohol, even when it is not legal. This baseline expectation of demand lends to the idea that a person needs money to buy their alcoholic entertainment. Without an income, there is no expectation of continued abuse. There is a limit to many people's partying, even when others find error in their short run acts of drunkenness.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    If the tourist countries wanted to make an impact on reducing drinking in resorts, they could impose curfews and restricted days of alcohol sales. They could reduce the hours when alcohol is available to force people to entertain themselves with gambling, sight seeing, or eating. The government could raise the legal age of drinking to discourage young people from visiting areas, which have low costs on alcohol for vacations. They could also raise the taxes on drinks bought from bars and clubs on resorts to curb the number of drinks people enjoy in a crowded resorts.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    While drinking alcohol stays inexpensive in resort communities, taxpayers are left to pay unpaid medical bills for emergency visits from fighting, rape, and other injury caused by someone intoxicated. People without insurance in medical need are paid for by the taxpayers of the nation, no matter where they live.

    •Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The private cost of possible legal trouble from underage drinking, damage to property, and the like are low. If the businesses have insurance to cover those things beyond their control. However, I think those businesses should be paying higher taxes to offset the irresponsibility of their patrons.

  156. bhejaichon2on 06 Dec 2011 at 6:14 pm

    @Ece_Erdem
    Im agreed with all of your answers. Drunken people will also causes loud noises which will disturb people who are around them. Also, the idea of them driving at night that will be the main cause of accident on the street, highways at night is definitely true. However, even though if they make negative advertisements for alcohol, people who in needed for alcohol still going to buy them without caring about the consequences. Overall, great post!

  157. Moniqueon 07 Dec 2011 at 2:00 am

    Overconsumption of alcohol would be an example of a market failure, because society’s scarce resources are not being allocated in an optimal way. Due to the effect on a third part, from the consumption of alcohol, this presents negative externalities of consumption. The social cost is higher than the private cost, and so the consumers do not take this into account and over-consume. As well, it could also be considered over-provision of a demerit good, since alcohol is harmful to society.

    One of the steps they could take would be to ban the alcohol. This may seem like it would really reduce the problems. However, this may just cause the sale of alcohol to go underground, and this could create even bigger problems. Another solution would be to tax the alcohol, because this would try to “internalize” the external costs, and make the social costs a private cost, which means people would consume less alcohol and potentially reach a socially desirable level.

    The proprietors of bars and clubs in the resort communities are benefiting because they are making money off of the tourists, however the bar and club owners only consider the private benefit to themselves, which is the increase in revenue. What they do not consider is the social cost to others, and since the government has to take care of all the sick and injured people, it is the taxpayers who are paying the price. A third party is being adversely affected by the actions of the producers (suppliers) of the alcohol.

    The private cost of running a bar in Malia does not reflect the social cost, because, as I stated above, the benefit for the owners would be the extra revenue, but they do not consider the social costs to the surrounding area, such as the injured people, the loud noises, and the law-breaking and other problems like that. Since the owners do not have to deal with that, they do not consider it a cost to them, and so their private costs do not reflect this additional social burden.

  158. Moniqueon 07 Dec 2011 at 2:12 am

    Good point about the fact that because of their plans to go on holidays to drink, price would not affect a tourist's consumption much. In this case, the alcohol has an inelastic PED, which means that when the government puts a tax on it, it would not decrease demand by as much, so the tax would not be as effective in causing people to drink less. However, it would be able to raise money for the government to deal with the situation, for example, what you mentioned about using the money to raise awareness about alcohol. Great points :)

  159. Jtruex2on 07 Dec 2011 at 5:41 am

    •Is overconsumption of alcohol a market failure? If so, what type could it is classified as?
    Overconsumption of alcohol is an example of market failure while on a smaller scale. It would be classified under the over production of demerit goods. People are seeing their personal benefits (being intoxicated) over the social benefits (costs to the state for medicinal care). This causes the markets resources to be misused and can therefore cause market failure.

    •If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    There are a few actions that could be taken in order to prevent drunken tourists from causing havoc. A larger taxation on alcohol in these areas would not prove to be efficient in preventing these problems due to the fact that it is an inelastic good and consumers will continue to purchase it. The government could however crack down and create large fines for being drunk in public. They could also fine the resorts and hold them responsible if the medical problem or damages are caused on their private property. This in turn would cause the individual resorts or bars to deal with these issues in order to maintain a healthy business and keep a profit.

    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    While the drunkards are causing chaos in the resort communities the bars and clubs are benefiting without any consequence. They gain money from the tourists that drink large amounts of alcohol. They would be considered the ones that are privately benefiting from the over production of the demerit good of alcohol (reference to first question). They benefit while the tax payer suffers from the social consequences of the production of a demerit good.

    •Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    I am not exactly sure on the regulations in Greece but it seems as if the private cost of owning a bar does not reflect the social cost in the slightest. A bar is a fairly profitable establishment that does not suffer very many consequences from the government (other than high taxation on alcohol). From what the article states, they are profiting while causing a very high social cost to the resort communities.

  160. Jtruex2on 07 Dec 2011 at 5:45 am

    @Merve_Akpinar
    I like your post but I am wandering if when you talk about jumping over the optimum level you are talking about personal level or the overall consumption of a society. I was also wandering about your statement that we can destroy the inelasticity of alcohol. Would this then make alcohol elastic?

  161. kedwardson 07 Dec 2011 at 4:02 pm

    This situation is an example of a moral market failure because citizens are trusted with the decision to drink. Governments can always intervene and impose a tax, or strongly encourage citizens to avoid excessive use of alcohol (as they did here with advertising). However, free people are exactly that. They will not always listen to the government because they believe that strips them of their rights. People do not take kindly to the government telling them what and what not to do, especially in moral matters like these.

    Serious tax imposition to encourage the communities not to purchase the alcohol, or a fine for the resort community if they are found with too many drunk tourists. The fine would encourage the resort administration to get more involved, however this would have to be a policy in all resorts or the ones with the rule would just lose their business.

    Taxpayer money will have to be spent in order to repair either physical damage created by the drunk tourists, or in an effort to advertise against and truly prevent the over-consumption of alcohol. The bars and the clubs will receive more publicity, and even a subsidy from the government in an effort to stop the drunk tourists.

    The price to operate the bar, and the profit acquired probably does impact social cost. The bars would gain more revenue by selling more alcohol, therefore increasing the number of drunk tourists. These drunk tourists are causing public issues and more social problems. The costs inflicted on the public services & the time of the government are all directly from the actions of these tourists, caused by the alcohol marketed in the bar.

  162. kedwardson 07 Dec 2011 at 4:10 pm

    @ Merve_Akpinar

    These massive amounts of government payments caused by the over-consumption of alcohol may not be fixed by just increasing the price. That would harm the profit of bars and clubs, and I think they would be less than pleased with that. They could, in turn, demand a subsidy, which may result in costing the governments more money. If this subsidy to make up for profits doesn't exist in every single bar/club, in accordance with the policy, there will still be too many drunk tourists which will lead the government to dish out even more money.

  163. jwinstanleyon 08 Dec 2011 at 10:49 am

    1. I feel that the overconsumption of alcohol can be seen as a market failure in the sense that it causes negative externalities in the effect it has on the consumers and the environment around the consumer, including other holiday goers.
    2. One action they could take would be to place taxes on alcohol to reduce the demand and thus the consumption, which would be better than a ban on alcohol as that would have a negative effect on the tourist industry.
    3. As tourists do not pay tax to the country they are on holiday in, any damage they do is payed for by taxpayers within that counry. In private bars though, a lot of money is made on this business from abroad, so whilst there are costs to the people of the country, buisness's like this still prosper.

  164. jwinstanleyon 08 Dec 2011 at 10:54 am

    I agree with all of your points Jamie. Its very hard to draw a line between gaining profit and being ethical, but unfortunatly, for business to survive things must be put into practice such as selling vast ammounts of cheap alcohol resulting in damage, which as you said puts the cost on the countries tax payers.

  165. Pcassidyon 08 Dec 2011 at 11:48 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    I would say thast yes the overconsumption of Alcohol is a market failure. The effect on the consumer and third parties presents as a negative externality of consumption, it causes excess social costs and has major social costs. Athought the consumer might get short lived enjoyment from the overconsumpition of alcohol it does not weigh out with the cost placed on third parties for exapmle health care and for this reason I would say it is a negative externality.
    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    Well the obvious step they could take would be to completly ban the consumption of alcohol, but this could cause the market to fail as people realise alcohol is harder to get. Therefore I would say that adding taxes to alcohol would be a better idea as it would reduce the consumption but would still alow 'some' people to buy it. This works because people of a lower income won't be able to afford to buy alcohol therefore cutting the overconsumption by around half.
    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The taxpayers from other parts of the tourist nations are indirectly paying for the damage caused to bars and clubs in the resort communities, proprietors of bars are benefiting from this because this means that with out 'wasting' their own money on repairs they can afford to keep running the bars and increasing their total revenue.
    In my opinion yes private cost of running a bar does reflect the social cost because the bar owners are exploiting the taxpayers, they know that with out the tax payers they wouldn't be able to continue to run the bars and clubs because of financial issues.

  166. Pcassidyon 08 Dec 2011 at 12:00 pm

    Hello Monique,

    I really liked how you pointed out how banning alcohol sounds like a great idea but can have some adverse affects, I also thought about this and how although it may seem like a great thing to do the consequences are far worse than we'd first expect. On your last answer I do not really agree with you here, surely the owner of a bar would consider the cost to the surrounding area as this could effect their total revenue? and also you put how they wouldn't consider the injuries to people? I again have to disagree as I think bar owners would be concious about people getting hurt on their premises because of the ability for the consumer to take legal action if they have hurt them selves. All in all I thought your response to the questions were very well thought out. Thank you.

    Pamela

  167. Guery Galantzevaon 09 Dec 2011 at 1:21 pm

    hi Monique

    I agree with your answers to hoe to solve the problem, and i especially like how you have considered wether the soultions would actually help. banning alcohol may not neccessarily decrease drunkenness, just increase illegal/black market.

  168. Sebastian vWon 09 Dec 2011 at 1:32 pm

    Yes it is a market failure. It could be classified as negative externalities of consumption. The using of alcohol has influence on the producers, consumers and others, known as a third party.

    They could raise the price of alcohol. Since people in university don't have that much money, an very expensive trip to Greece would be less interesting/appealing to them.

    The proprietors of bars and clubs in these resorts benefit from the tourists because they spend a lot of money on drinking. Though, a lot of them get sick and/or injured, which will be payed of government money. The taxpayers pay the government, so practicly their money ends up being health care for the drunk people.

    Well, the bar owners get a lot of money from the tourists there, the social cost is that people are breaking the law, screaming and do other disturbing things. Also the taxpayers will have to pay for the people who end up injured. But this doesn't reflect the private cost.

  169. SafonovaNon 10 Dec 2011 at 1:32 am

    The overconsumption of alcohol I think can be considered a market failure, because it is a demerit good, and especially in Malia, Greece it is over produced and over consumed, especially by British vacationers. It can be put under two classifications for a market failure…it is the overproduction of demerit goods as well as there are many externalities that come with the over consumption of alcohol, such as sexual assault, violence, disruption of peace in towns, arrests, health issues, both from alcohol and reckless behaviour caused by alcohol.
    If tourist nations wanted to crack down on drunken tourists, they would, I think, simply need to put a high tax on alcohol, a tax that is high enough to decrease consumption as well as make it less profitable for producers to produce alcoholic drinks. As soon as the price rises significantly, the demand for the drinks will decrease significantly too.

  170. SafonovaNon 10 Dec 2011 at 1:33 am

    The proprietors of bars and clubs in resort communities benefit at the expense of taxpayers from other parts of tourist nations because they are able to sell their alcohol and make a profit, however it is the tax payers in the nation that have to pay for the healthcare that is provided to the people injured when drinking.
    The private cost of running a bar in Malia definitely does not reflect the social cost because of the big number of negative externalities that are caused by the drunken tourists…these externalities include injuries to self, and others around them, that could include innocent and sober bystanders, a disruption of peace and quiet in the streets etc.

  171. SafonovaNon 10 Dec 2011 at 1:36 am

    Hey Monique :)
    In your response to question two, I think that banning alcohol altogether is a little harsh becasue if you ban alcohol altogether, sure you reduce the problems at first, but then alcohl will be sold illegally which will increase the dnager in selling it…as well it might seriously injure tourism in Malia and other resorts, which would have a negative impact on Greece's already failing economy :P

  172. Sebastian vWon 10 Dec 2011 at 1:09 pm

    Hey Safonova :)
    I like how you make one big story of your answer in stead of 4 separte paragraphs. Anyhow, I agree with what you say in the end, that if the price increases significantly, the demand will also decrease. Though I think that this price raise has to be very, very high because the demand for alcohol is close to being inelastic.

  173. Chris Clatworthyon 10 Dec 2011 at 2:51 pm

    Over consumption would be a form of market failure, reason being it is a demerit good; this is where the consumers consumer to many goods and servies that are seen as being bad for them which in this case, is alcohol. A demerit good is seen to have negative externalities, this can be seen in the article it self; how over consumption of alcohol makes the consumer reckless causing them to not only affect themselves, but others around them. For example, if an intoxicated person where to cause damage to themselves enough to go into hospital they would have to pay for the medical fee, but the hospital would also need to pay. Furthermore, if they were to break something in the community the government would have to pay for the repairs.

    The best way to preventing drunk tourists would be completely ban the consumption of alcohol. This would, however, have the possibility of causing a black market, this would have obvious affects such as a sharp drop in supply, as the penalties for selling the good cause people to shift into other industries. If the member of the community where causing the damages I would suggest putting high tax on alcohol because that would deter the consumers to realize the lack of utility and in turn shift their willingness to purchase alcohol downwards.

    Bartenders and club owners would benefit from an income of revenue because the tourists have a high willingness to purchase a lot of alcohol this is called private cost. However, they do not think how the drunken toursits will have an affect on the social cost mainly because it is not their problem, so to answer the question, yes running a bar in places like Malia, Greece will have an effect on the social cost.

  174. Chris Clatworthyon 10 Dec 2011 at 2:55 pm

    I like how you stated in is an example of moral market failure. I agree with you 100% on that because people are trusted to drink responsibly, and when they done consequences occurs.

  175. Jessica Kennyon 10 Dec 2011 at 8:04 pm

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Yes, it is due to the presence of negative externalities of consumption, coming from the overconsumption of demerit goods.
    •If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could impose a higher tax on alcohol, which would shift the MPB curve down, closer to the MSB curve. They could also impose regulations, such as restrictions on the time of day allowed for the sale of alcohol, as well as places where it can be drunk.
    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The owners of bars and clubs benefit more than the taxpayers, because they can sell at the level of marginal private cost, while the taxpayers are affected at the much higher level of marginal social cost, since the sellers earn revenue and do not have to pay for the policing, while society does not earn a revenue and suffers from having to spend on policing and health, which could be otherwise spend on goods such as education or sanitation.

  176. Jessica Kennyon 10 Dec 2011 at 8:13 pm

    I like your point about setting a quota of sold alcohol, it seems more fair, considering that making it more expensive by taxing may not be so effective in decreasing consumption given that these are resort communities, so the customers who can afford to go there will probably be able to pay for pricey alcohol anyways.

    Also I would like to add to your answer on 3 that taxpayers also lose out in the fact that their tax money has to be allocated toward fixing the damage from tourists, rather than on important merit goods like public education.

  177. hslateron 11 Dec 2011 at 3:34 pm

    1. Yes it is a market failure as it is a negative externality of consumption. It impacts the rest of society in a negative way. However, it can also have positive effects on society by creating business for local companies. I feel that the negative effects need to be sorted out more than we need to keep the positive impacts.
    2. They could impose a drinking ban within the resorts however, this would mean that the tourists would just move outside the resort. If they did a complete drinking ban though, this would mean a great loss of revenue for the government and may not be sensible in economic terms. They could also impose a tax on alcohol to pay for any negative impacts that overconsumption has. This may also act as a deterrent.
    3. The proprietors of the bars and clubs are benefiting from the tourism as they are the main target group for their goods/services. However, this is at the expense of the taxpayers as they have to pay for the negative effects of the overconsumption of these goods.
    4. The profit that the bars/clubs make in the tourist season will not reflect the social cost as they will recieve much more than the private cost of running it.

  178. hslateron 11 Dec 2011 at 3:40 pm

    Hey Pcassidy

    I think it's really good how you've come up with a solution to the problem but you have also explored the problems that this would then present to the nation and society and I think that taxes would be much more effective as this would reduce the consumption but not harm the local businesses too much.

    hslater

  179. ichoi2on 11 Dec 2011 at 3:44 pm

    - Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a market failure. It should be classified as negative externalities of consumption. Overconsumption of alcohol is a market failure because habit forming products like alcohol are not usually desirable consumer products, which the government will try to reduce the consumption by banning, imposing tax and so forth.

    – If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If the tourist nations were serious about cracking down on drunken tourists, they could impose tax upon alcohol so that the MPB curve will shift to the left to meet the MSB curve. That way, the government can expect a drop in alcohol consumption.

    – How are proprietors of bars and clubs in resort communities benefitting at the expense of taxpayers from other parts of tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs in resort community benefit at the expense of tax payers because that money will be used to pay for the clubs and bars expenditures, such as damages caused by the tourists. I think the private cost of running a bar in a place like Malia, Greece reflects the social cost, because the cost of damages and the wreckages of the city

  180. ichoion 11 Dec 2011 at 4:27 pm

    Hey chris!
    I found your answer to the last inquiry very interesting! I wrote basically the same ideas for questions one and two, but I see that you have included some ideas to your response which i never thought of before! I suggested that the government could impose tax, but i didn't discuss about banning alcohol. Also for your third response, I had a slightly different stance because I said they will benefit, but reading your response I do think that rather than the drunken tourists benefitting the bars and clubs, but rather, the tax burden will be put upon the locals whereas the damages and social costs will be caused by those foreign tourists.

  181. jzheng2on 12 Dec 2011 at 12:25 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Overconsumption of alcohol is harmful in many ways. For that reason, it causes negative external costs to many people.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    First thing is that they can raise the taxes of beverages in the resort communities, to increase the price of alcohol, which can decrease demand.
    Second thing is to tax firms that are producing these beverages for the resort communities, in order to decrease their production, thus decrease the supply of alcohol.
    Both of these actions will decrease the consumption of alcohol, if not by a significant quantity.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The bars and clubs in resort communities are benefiting a huge sum from the consumers to pay the taxes, thus the private does not even show the slightest reflection of the social cost.

  182. jzheng2on 12 Dec 2011 at 3:11 pm

    I believe that alcohol drinking should not be considered beneficial, as the effect of lack of alcohol occurred by drinking alcohol in the first place. This 'lack' effect is caused by the habit of drinking alcohol, and then lack of drinking it.

  183. ahamdockon 12 Dec 2011 at 5:24 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes it is market failure; I can come to this conclusion because the supply for alcohol is matching the demand, without an increase in price by firms. This means that alcohol can be consumed a lot without any change in price, subsequently resulting in the overconsumption of alcohol that has been noted. Furthermore, this can also be considered market failure because the overconsumption of alcohol creates negative effects, or negative externalities, beyond the market, these include; drunk driving (possibly resulting in accidents, in which case the people will have to pay for through taxes), death, property destruction, etc.

    2. If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    They could impose a tax on alcohol, effectively making it more expensive to consume as much alcohol as people did prior to the tax. However governments must first consider the impact of the tax; high tax will result in the creation of secondary sources to acquire alcohol, or black markets, while too low will have no effect.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    They are benefiting if they offer the sale of alcoholic beverages at lower prices, in order to remain competitive. This would result in more people getting drunk, and as discussed in the article, drunkenness largely results in personal injury, property damage, etc., where the taxpayers will have to bear the blunt of the indiscretion. No it does not, because the social cost, has effects, such as those listed above, while the private cost is relatively minimal.

  184. ahamdockon 12 Dec 2011 at 5:28 pm

    @Jtruex2
    I like your post, and especially how you sysnthesized the taxation of alcohol with the fact that alcohol itself is an inelastic good, and therefore would not be effective. Well done!

  185. Samanthaon 12 Dec 2011 at 6:33 pm

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    The overconsumption of goods is not a market failure because the profits from the booze probably still outweighs the costs of the drunkenness on the community.
    •If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    Some actions that could be taken if people were serious about cracking down on drunk tourists is the requirement of these tourists to pay a heavy tax, limit on the amount of booze that could be bought, or placing taxes on the booze itself after a certain amount.
    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The proprietors of these bars and clubs in resort communities are benefitting at the expense of taxpayers from other parts of the nation because they sell vast amounts of alcohol and when these people that consume the alcohol get arrested, often it is the taxpayers that need to pay the officials that do the arresting The private cost of running a bar does reflect the social cost because most likely these places are still paying a tax in order to serve alcohol in their bars and this tax is probably higher than the cost of taking care of the number of people that behave irresponsibly as a result of this consumption.

  186. skim3on 12 Dec 2011 at 6:39 pm

    I think you raise some pretty interesting points and solutions to the problem, but I don't know if you can consider overconsumption of alcohol a complete market failure since we are not told in the article that the profits made by the people outweigh the costs. However, you make an interesting argument.

  187. skim3on 12 Dec 2011 at 6:41 pm

    I really like what you said about the negative consequences only being placed upon the consumer and not the producer. Also, the mention of private costs shows that there is some benefit. Do the consequences really outweigh the benefit?

  188. rpuri2on 13 Dec 2011 at 10:38 am

    1) Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    The overconsumption of alcohol is considered as a market failure. This is evident as in the diagram shown in the article, the marginal private benefit of consuming the good is greater than the marginal private benefit thus creating negative externalities for society. It could be classified as a result of the overproduction/consumption of demerit goods in society; goods that are deemed to be ‘bad’ by the government who thus try to reduce the marginal private benefit.

    2) If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    To reduce the demand for the good and the marginal private benefit (thus reducing the negative externality and ‘fixing’ the market failure) governments could impose a tax directed to the consumption of the goods. Although the good is relatively inelastic as it is an addictive good, the increase in price for the good will result in some decrease in demand; even if it may not be that great of a change in proportion of quantity demanded. Following the British Consulate’s example is also possible, creating negative advertisement campaigns; this will increase awareness for the dangers of the good. Banning the good completely from society is not possible and will have adverse effects as the creation of black markets could occur and people might turn to drugs and other ‘worse’ goods.

    3) How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs in resort communities are benefiting at the expense of taxpayers from other parts of the tourist nations as they benefit from the consumption of the good. As suppliers their primary goal is to maximize on their profit and make the greatest possible revenue. This is at the expense of the taxpayers who have to pay for the damage and any inconveniences caused by the drunks in society. The government must allocate some funding in fixing any of these problems caused by the drunks, thus reducing their funding they spend on public goods (roads etc.). The private cost of running a bar in Malia and Greece is much less than the social cost of the drunk tourists, this shows the negative externality created.

  189. Anair2on 13 Dec 2011 at 3:32 pm

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Well, I must say in this case, overconsumption of alcohol is definitely a market failure. The negative externalities with the consumption of alcohol with the British Tourists are very great as they mostly binge drink, causing havoc throughout the other European Nations. As seen on the diagram in the article the MPB is far greater than the MSB, therefore creating negative externalities. As the negative externalities are due to the consumption, this would be considered as a product negative externalities of consumption. Alcohol itself would definitely be a demerit good, as it is seemingly being over produced and consumed past the socially optimum and is considered not good for the nations by the governments,

    2.If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    This market failure, as a negative externality of consumption could be addressed in several ways. Firstly an imposition of a tax could occur directed to the consumers, which would therefore increase the price and decrease the quantity demanded of the good. Alcohol is definitely a relatively inelastic good but nonetheless follow the market mechanism so the quantity demanded would still decrease. Even if the tax would not reduce the quantity demanded drastically, it would mean that government would have more funds to tackle it in other ways such as a campaign against alcohol. Creating Advertisements on all means of media, therefore the MPB of drinking would be closer to the MSB, as it would mean that the tourists would be more aware of the product’s effects. Looking at it in another way the article states that these tourists look for ‘cheap booze’ so with a price floor it would mean that the binge drinkers would be targeted and the rest of the consumers (native consumers) of alcohol would not be affected by a great deal. Lastly it is an option for the government to ban the alcohol as a whole but that would greatly affect the economy.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs truly benefit greatly at the expense of taxpayers from other parts of tourist nations. The reason is that suppliers, similarly to producers want to get the most profit possible that they can get. This means that these tourists from countries like Britain benefit them greatly as they consume a great deal of alcohol. It is at the expense of tax payers because these tax payers as, it is their funding put in place for the mending of the problems they bring and this affects the development of the country. As their funds would be much better if allocated to bettering infrastructure and etc… rather than paying for damages caused by tourists. The private cost of running a bar in a place like Malia or Greece, does not at all reflect the social cost because, the private cost of running a bar itself is not that high in comparison. Whereas the social cost caused by these tourists are much greater as they cause havoc and inconveniences to society.

  190. Anair2on 13 Dec 2011 at 3:49 pm

    @ ahamdock

    I agree completely with all your responses to the questions, and my responses to the questions were quite similar to what you have done. I really liked how for the first question how you actually gave examples as to what the inconveniences and problems, tourists cause that affect society as a whole. For the second question do you believe that only an imposition of a tax would crack down on tourists, What do you think of banning alcohol, campaigns against alcohol and etc..? Because I believe those could also potentially be possible economic actions. As per the last question I have no comments, as I cannot seem to think of a way in which the private costs of the bars would reflect the social costs.

  191. Zhi Qion 13 Dec 2011 at 4:02 pm

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Over consumption is a market failure, and it is because of negative externalities. ‘Bad’ things that people does after they drink.

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    They could impose a tax on alcohol, so that it will shift the MPB towards the MSB.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    They make a lot of profit by selling alcohol, but it is at the expense of people who consume it. As after they consume it, they may get themselves into trouble. or harm other people.

    The private cost of running a bar is far lower than the social cost, as the social cost includes the negative externalities but the private owners don’t have to account for that.

  192. Zhi Qion 13 Dec 2011 at 4:19 pm

    Jessica Kenny, I think it is good of you to bring up that another expense of the society is the money they have to spend on medical issues. I left out looking at this area when thinking about this issue. I only thought about how they may harm themselves and others when they are not in a clear state of mind. I think that my points can be added to yours, to make your answer more complete.=]
    Vicky

  193. EmilyK-pamo.eduon 13 Dec 2011 at 4:55 pm

    1. Overconsumption of alcohol is market failure because there are not enough of the good to support the demand to consume it. This is when the marginal social benefit is less than the marginal private benefit of consumption. Without intervention the good or service will be under-priced and there would be negative externalities. All this would cause a welfare loss.
    2. If the tourist nations wanted to lessen the number of drunken tourists then they should increase the price of alcohol in the country and put a tax on it. This would decrease the demand to by the alcohol because it would cost more on average.

  194. EmilyK-pamo.eduon 13 Dec 2011 at 4:56 pm

    3. Bars and clubs benefit from the tourists because they make more business during the tourist seasons. If the taxes were increased some tourists would still buy from the bars to enjoy their experience in the country. From this they would make more profit when the tourists come. In Malia, Greece there would be more profit to the private cost for owners of a bar because Greece is a popular tourist place and so the bar owner would benefit. The social cost reflects the private cost because by going to the bar it adds to the experience for the tourists to build a better experience. So the bar would benefit both social and private.

  195. EmilyK-pamo.eduon 13 Dec 2011 at 5:13 pm

    I agree that this would cause market failure because the tourists can consume the alcohol with no extra cost. This creates negative effects and negative externalities.
    In my post I also said that the government should impose a tax on the alcohol. As I was writing I could not quite figure out what the term for illegal markets was. By reading your post it reminded me of the black market and how sellers will try to still sell alcohol at a lower illegal price below the minimum price to gain profit.
    I did not think about the sales that the alcohol could have so more can be bought when a large sale happens. This could cause a problem because people would just buy a large amount of alcohol then and use it over time and then there still would be the problem.

  196. Sanghyunon 13 Dec 2011 at 6:05 pm

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    I think that over consumption of alcohol is a market failure. Defining what market failure is, market failure is failing allocate in a proper manner so that we might oversupply and consume demerit goods such as alcohol; therefore this can be considered as a market failure This can be considered as a negative externality from consumption
    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    I think that we should impose a tax for such products, because it will help reduce the high welfare lost that we have due to the negative externalities. Since, the marginal cost will increase, the actual area of where the welfare lost will decrease. Tax may be an useful solution to solving such problems.
    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    I think that the regulations in such countries do not reflect the social cost. Because if more tax is implemented, it is not the private owners that are affected by the negative externalities of the social cost. Even though there might be drunken tourist who might cause mischief, they would usually cause mischief after they leave the building damaging public property, which requires the people to pay taxes to fix; however ,since the bar itself wasn’t affected much, there isn’t much change in private cost.

  197. Sanghyunon 13 Dec 2011 at 6:08 pm

    Hi Samantha, it is an interesting to consider that the costs of the drunkenness on the community when looking at market failure, but I think in general, there was an oversupply and consumption of alcohol, so it might have been in a market failure. Just an small thought about it :P

  198. rlewison 13 Dec 2011 at 7:04 pm

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    No, I would not say that the overconsumption of alcohol is a market failure. The profit margin on alcohol is high, and it is also highly taxed. Baring that in mind, the cost as a result of the drunken behaviour of tourists would probably not exceed the tax payed by all alcohol consumers.
    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The economic actions that could be taken are to increase the tax on alcohol, and limit the number of units a single person is allowed to purchase at once. If the tax is increased and the it is made to be inconvenient to buy a large amount of alcohol, it would deter people from getting really drunk.
    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The proprietors of bars and clubs are benefitting at the taxpayers’ expense because they are making huge amounts of profit when they sell vast amounts of alcohol. When the consumers of the alcohol become drunk and begin to wreck public property, the money to repair that property comes from the taxpayers.
    The private cost of running a bar or club in a popular tourist destination probably doesn’t reflect the social cost because the places would have to be licensed to sell alcohol, which costs them money, however this is probably less than the cost of the damage done by the drunken tourists.

  199. rlewison 13 Dec 2011 at 7:10 pm

    I disagree with your first point Jack, because the overconsumption of alcohol boosts the market for it. But I do agree with your second point. Again, not too sure about your third point, because although the tourists don't pay taxes in the country as such, they will be paying tax on the alcohol that they are buying in the country :)
    Rachel x

  200. agramachoon 13 Dec 2011 at 7:27 pm

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Yes, the over consumption of alcohol is a type of market failure. This is because it can create negative externalities when consumed too much. A drunk driver may get in a car accident, for example, which damage costs would have to be paid by the society through indirect taxes (not the damage of the car, but the damage of a broken light pole). This negative externality is a negative externality of consumption, since costs are generated and received in consumption.

    2.If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The government could impose taxes on alcohol, which would decrease the amount of consumption; however, the imposition of high taxes in order to prevent drunken problems could create other problems, such as an emergence of an illegal market (black market).

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?

    Proprietors of bars would benefit if they sell their products at a lower price in order to compete with other bars, however, such low prices lead to more people getting drunk and according to the article, such behavior results in personal injury, property damage, etc.

    4. Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The private cost of running a bar in Malia does reflect the social cost because the social costs caused by the over consumption of alcohol sold by these bars could lead to property damage, for example, and this damage would have to be paid by the society in the form of indirect taxes.

  201. agramachoon 13 Dec 2011 at 7:36 pm

    1. Wouldn't the over consumption of alcohol create negative externalities though? As stated in the article, drunkenness can lead to property damage, which costs would have to be covered by society as a whole through indirect taxes.

    2. I agree with you; imposition of taxes on alcohol or limit the number of units a single person is allowed to purchase at once may reduce the consumption of alcohol; however, the government has to consider that too high taxes may lead to the emergence of an illegal market.

    3. If a drunk person causes damage to a property, the society would have to pay it in the form of indirect taxes. The bar runner being part of the society, would have to pay indirect taxes as well.

  202. rpuri2on 13 Dec 2011 at 8:34 pm

    Hi Chris, I agree completely in your assetion that the overconsumption of alcohol would be a form of market failure as it is a demerit good and that it has many negative externalities to society and external costs to society that are described in the article itself. I like your example of a drunken man and hospital. Your analysis of the what could be done to fix this failure too is good. I agree that banning the good completely will create a black market as people will be able to profit from the lack of supply in the community. Also a tax on the alcohol is a possibility as you do outline, but what do you think about the effect of a tax on the actual demand for the good due to the inelastic nature of alcohol (being an addictive good)? Good analysis overall.

  203. Stefan Josephon 13 Dec 2011 at 9:17 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    I do believe the overconsumption of alcohol is a market failure because the good isn't being allocated efficiently as the consumption is at a high rate which causes these crimes to happen. These crimes represent the marginal social cost of society and the benefit of the consumer is that they are satisfying their addiction. We can clearly state this market failure is one where the private firms are benefiting more because they are not taking the negative externalities into account.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Firstly, very influential campaigns should be created to raise awareness about the consumption of alcohol and its effect on society. Secondly, the most obvious way to resolve this problem would be to impose a sales tax on alcohol to lessen the demand for it. Though its inelasticity might question the significance of such a tax. Lastly, the British government should be forced to create regulations on the production and consumption of alcohol to prevent such incidences to happen and resolve the market failure.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Definitely. Proprietors of bars and clubs would benefit at the expense of taxpayers because as they are profiting from the sales of alcohol to tourists, the taxpayers have to fund to repair the damage created by the drunken tourists. The social cost is very high for Malia because with the high number of drunks, it would diminish the tourism as visitors would not want to experience the damage done by drunken tourists.

  204. Olivia Dorrityon 13 Dec 2011 at 9:42 pm

    1) I would say that overconsumption of alcohol is a market failure in this instance, as there are many negative consequences, not only on the communities but on the individuals. While there is a high profit margin for alcohol, in my opinion the negatives outweigh the profits, as the consequences can be long-term.

    2) On the surface, the best move would be to completely ban alcohol. However, this is unlikely to be effective in practise as it would encourage a black market, as was seen in America during the prohibition era. The most effective way to cut down alcohol consumtion would be to raise the tax on alcohol to dissuade consumers from buying the alcohol in the first place. It would also bring in extra income for the government in areas where alcohol is still bought.

    3) Bar and club owners benefit from the consumption of alcohol, as they are usually able to sell a lot and therefore gain income. However, if there is an abuse of the alcohol, the businesses are likely to suffer the damage of the ensuing drunken rampages.

  205. aaxler2on 13 Dec 2011 at 10:04 pm

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    oAlcohol consumption could be considered a market failure, because the social cost is far greater than the price cost. It would be classified as a negative externality of consumption
    •If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    oThey could place a special alcohol tax on a non-residents. They could as the article suggested they were doing place negative advertisement like “drink responsibly signs.” The could also make the communities dry by forbidding alcohol entirely
    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    oThe bars and clubs are benefiting from the profits they make from the sale of liquor. The private cost doesn’t really reflect the social cost. The profits the bars make aren’t hurt by the social costs ( damaged public property, emergency room stress, general public rowdiness).

  206. aaxler2on 13 Dec 2011 at 10:08 pm

    I agree with your comments, that the over-consumption of alcohol is a market failure, however, I'm not sure a restriction on the time of day would better much. I'm assuming you would restrict the sale of alcohol at night let's say past 8, but if people are on vacation they don't have to work so they could be partying all day.

  207. smarttikalevi2on 13 Dec 2011 at 10:35 pm

    1) The over consumption of alcohol is not really a clear type of market failure, however, it has a negative externality of consumption on the people around them. In this instance the negative externalities of over consumption of alcohol has several negative effects especially to the community, but also to some individuals (as i mentioned, the people around them) – we call the ones suffering in this case the third party.

    2) The first obvious thing that comes into my mind is tax. The economic action for the governments of countries with a lot of tourists could be placing much higher tax on the alcohol products. In this way, more revenue can be collected which the government can then use for the cleaning up the messes wasted tourists cause AND also, less tourists would get drunk, which obviously is the main goal.
    If thinking deeper for different solution, banning alcohol is one choice, but to be honest, the alcohol producers wouldn't like that at all.

    3) The tourists from other countries would not pay taxes to the country they are visiting, but if the tax was placed specifically on alcohol products, the tourists would have to pay the price, which includes the tax. This way the government get huge amounts of money. Some of the taxes, which the tax payers of the country pay would however end up in the situation, where it is used to clean up the messy places the drunk tourists have created.
    However, this high tax would give an opportunity to the black market sellers to sell alcohol for lower price. If the tourists were to buy alcohol from the black market, the government would have pretty much increased the tax for nothing. The government would end up with much less total revenue, and still messy places everywhere, if the black markets were created. However tourists are not likely to buy alcohol from illegal sellers, that was just a thought.

  208. smarttikalevi2on 13 Dec 2011 at 11:02 pm

    @ Stefan Joseph
    Well explained overall: you have good analysis and clearly expressed opinions.
    For the first question you have explained well the relationship between your answer and the question, but you seem quite certain that over consumption of alcohol in general is a market failure. I personally do not believe this is the case, as some individuals do not harm/wreck anything/anyone. Isn't it only when the effects of the over consumption are negative?
    For the second question you have two major ideas, and I totally agree you on the second point you make about tax. But for the first point, you say that "influential campaigns should be created to raise awareness" of the over consumption of alcohol. I am pretty sure that most of the people who over consume alcohol know what the consequences will be like, so I find this kind of useless. However, if the campaign really is INFLUENTIAL, then it might work (but to be honest it is really hard to get something like that work).
    In the third question I totally agree with you on everything you say – >The private cost of running a bar in a place like Malia indeed reflect Greece's the social costs.

  209. kfletcher2on 13 Dec 2011 at 11:07 pm

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Yes, the overconsumption of alcohol is a market failure because resources are not being allocated efficiently. It is negative externality of consumption because the consumption of alcohol provides a spillover of negative effects to society. It is also a demerit good as alcohol is considered bad for both the consumer and society.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could firstly raise a tax on the purchase alcohol, lowering the demand of alcohol, and also they can run a advertising campaign to stop the overconsumption of alcohol and to drink responsibly as mentioned in the article.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost?
    Explain.
    Yes proprietors of bars benefit at the expense of the taxpayers, because tourists buy large amounts of alcohol from them, and the proprietors benefit from them (this is the private gain), however taxpayers have to pay for the police to enforce the law and they also have to pay for the damage caused by the drunks (this is the social cost). No the private cost does no reflect the social cost because the bars and clubs make money while the social cost is money lost.

  210. Auroraon 13 Dec 2011 at 11:14 pm

    1.I think that over-consumption of alcohol is a market failure, because it is a demerit good that by consuming it causes negative effects on the society and the consumption of alcohol has negative externalities affecting it so it confirms that is a market failure. In my opinion it can be classified as negative externality of consumption as it is created by the consumers and it affects all the society.
    2.Government could impose taxes in order to compensate the shift on the demand curve due to the externality. However it would be very difficult to establish the value or the price of the negative externality. In addition it can cause the origin of a black market because the high prices. The government could also try to put expensive fines if someone drunk does something prejudicial to the nation in order to motivate tourists not to do these actions.

  211. Auroraon 13 Dec 2011 at 11:14 pm

    3.They benefit because while the residents are paying taxes, the proprietors’ of bars and clubs establish the price very low in order to compete in the market so more people get drunk but the damages made by them will be paid with the taxes collected from all the people of the nation.The private cost of running a bar in places like Malia and Greece is much less lower than the social cost and this shows us the negative externality created.

  212. kfletcher2on 13 Dec 2011 at 11:14 pm

    I like your answer, but do you think the ban of alcohol would lead to a black market,or are you suggesting that alcohol is prohibited in some area and not others like smoking?

  213. Auroraon 13 Dec 2011 at 11:25 pm

    I think you made some interesting points but I think the over-consumption of alcohol only benefits the producers although they will have later to pay the damages made by the drunk tourists by the taxes. Finally I think that if they ban to purchase the alcohol or if the government imposed a tax maybe a black market will appear so in my opinion I think it is really difficult to solve this problem although there are ways that may motivate not to get drunk or over consume alcohol such as advertisements or campaigns.

  214. MMartinsonson 13 Dec 2011 at 11:50 pm

    - I think that alcohol over- consumption is a market failure. It is classified as an over-supply of demerit goods. The issue in over-supply leads to over-consumption.
    -If the tourist nations were serious about cracking down on drunken tourists then the government should impose even bigger tax on alcohol at those resorts. This would reduce some problems, but will not eliminate all.
    -One is obvious that the proprietors of bars and clubs get most of their revenue from selling alcohol, and as maybe some of you have mentioned that usually in bars and clubs it is more expensive than in a shop. However, it seems that it is still too cheap in order to reduce the trouble caused by those tourists.
    -Social costs reflect for sure, because not all the money goes to proprietors some of the money goes to government, tax. However, if it is a tax-free zone then the social costs would not reflect in those particular resorts.

  215. MMartinsonson 13 Dec 2011 at 11:56 pm

    I do not necessarily agree with your statement were you state that it is classified as negative externalities of consumption, well partially it is but I think that in this case it is over-supply of demerit goods. First of all it is merit good, and second of all it clearly says over-consumption and as it say in a textbook that over- supply leads to over-consumption.
    Talking about injuries, government does not pay for their health care it is either their insurance or themselves if they are not insured.

  216. ssewellon 13 Dec 2011 at 11:58 pm

    I agree with your conclusion about the potential methods of cracking down on drunk tourists; although advertising would be ideal, it would not be very effective, and people main aims on holiday are to enjoy themselves, without having to be responsible as usual. I think an indirect tax is the wisest course of action, but you are absolutely right about the effect of elasticity. In fact, demand might be even more inelastic on holiday, as people will not be willing to compromise their fun, even if it costs extra.
    In terms of the private costs, I think that these are part of the social cost. However I would say that the pressure put on emergency services, such as police and ambulances, would be a more significant cost, whichaffects the whole community.

  217. Rory Thorntonon 14 Dec 2011 at 3:27 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    The overconsumption of alcohol is considered a market failure. It’s considered a market failure because the resources, in this case the alcohol, is not being allocated efficiently. The overconsumption of alcohol could be classified as a negative externality because it forces a variety of negative affects onto the society/public.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    In the resort communities, there could be a tax charged when purchasing alcohol. This tax would increase the price of the alcoholic beverages, resulting in a decrease in the demand. With a lower demand, less people would buy enough alcohol to the extent in which they are drunk and cause trouble. Another major effort which could be taken is to advertise the negative effects of alcohol, convincing people to drink safely instead of “going all out!”

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost?

    Proprietors of the bars in resort communities benefit because they are the one’s selling the beverages to the public. Taxpayers (the public) are forced to pay taxes in which a proportion of their pay goes towards law enforcement and clean-up/repair of the damages caused by the drunk people. The private cost doesn’t reflect the social cost because the actual bars and clubs are gaining profits when the society is having to pay for some of the negative externalities.

  218. mlopezrubio2on 14 Dec 2011 at 8:23 pm

    •Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Overconsumption of alcohol is a market failure, because it causes the society to suffer a welfare loss and to pay external costs. It would be a negative externality of consumption, because it’s caused by consumers and it affects the demand. The overconsumption means that the product should be consumed less in order for the society to reach its optimum.
    •If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    If they wanted to stop this from happening they could do it in various ways: by imposing taxes, making negative advertising and regulating the market, being their objective to move the quantity demanded to the left.
    Taxes: the tax should be the same amount of money as the costs the negative externality is causing on society. The aim of the tax would be to shift the supply curve leftwards so that the price increases and the quantity demanded decreases.
    Negative advertising: as the article says this has already been done by some governments in order to persuade people to drink less and move the demand curve leftwards.
    Regulations: government can impose various types of regulations, from a ban to a simply restriction. In this case I don’t think the government should ban the alcohol because that would damage the restaurants and bars and the whole market as, as said in the text, tourist may decide not to go to a place where they can’t have fun anymore. But the government could restrict the consumption of alcohol or set price controls so that alcohol is not excessively cheap and consumers don’t demand it so much.
    •How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    Proprietors of bars and clubs in these places are benefiting at the expense of taxpayers because they are obtaining a lot of profit from the sale of alcohol and they are not paying for all the damages the consumption of alcohol makes to the rest of society. So the private cost wouldn’t coincide with the social cost of running a bar in these places. The private cost will be higher than it should be because proprietors of bars aren’t taking into account any externalities, but there are negative ones. And so the social cost will be lower than the private one and the society will lose welfare.

  219. mlopezrubio2on 14 Dec 2011 at 8:31 pm

    Reply to Rory Thorton
    I agree with you, but I think there are mroe things the government could do to prevent tourist from damaging the country. In my oppion another really common and good way of eliminating the external costs would be to impose some kind of regulation or restriction, such as not letting one person drink more than a certain quantity or after a certain hour, or make the bars be more resposible about the effects the product their selling will have on society instead of just look at the profit they will make. However I think your response is pretty coherent and I have really similar thoughts about the subject.

  220. ctoantran2on 15 Dec 2011 at 12:15 am

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Over-consumption of alcohol is indeed a market failure due to the negative externalities associated with alcohol abuse. Alcohol abuse will increase risk for liver cancer and failure and can decrease workers' efficiency/safety standards, resulting in greater burden on society. Alcohol could be classified as a demerit good, meaning that its market failure is the over-supply of a demerit good.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    They could take a few courses of action:
    1. They could increase the price of alcohol, producing revenue from taxes and reducing consumption.
    2. They could restrict alcohol consumption with legislation, banning or reducing alcohol consumption.
    3. They could use negative advertising to reduce demand and consumption.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs in resort communities benefit at the expense of taxpayers from other parts of the tourist nations because, despite the damage caused by tourists, the state and not the bar has to clean up, meaning that the marginal social cost is greater than that of the marginal private cost.

  221. ctoantran2on 15 Dec 2011 at 12:21 am

    Market failure does not cause companies to fail; that's not its definition. Instead, it means that a market fails to allocate resources efficiently. Alcohol over-consumption is a market failure because the MPB are greater than the MSB due to negative externalities, such as drunk and disorderly behavior.
    I agree on your proposed courses of action for governmental intervention, but which one would be the most effective in your opinion? Would raising the drinking age do anything meaningful, or would the enforcement required outweigh the cost?
    I find your view on businesses paying higher taxes to offset the social cost of disorderly behavior, but would that actually do enough? Would there not still be disorderly behavior and negative social consequences such as rape and injury?

  222. Mmecathumon 19 Dec 2011 at 10:11 am

    1.Overconsumption of alcohol is definitely a market failure that has a huge external cost to a third party. This is because alcohol is a demerit good and has a negative externality consumption nature. When alcohol is over consumed, the social cost is almost intangible. It can have such a vast range in market figure whereby the consequences span from merely falling asleep to causing an accidental death of say, a multinational company CEO! This is because no amount of taxes by the government can compensate for the potential losses incurred.
    2.Taking into consideration that tourism would be the primary focus of these nations, any negative action curbing or restricting tourist activities including but not limited to the consumption of alcohol would adversely affect the projected economic growth in that nation. Having said that, tourist nations are faced with the prospect of facing a catch 22 situation. On one hand, the tourist market helps boost economy. On the other hand, the “possible” ill effects of over consumption of alcohol can negatively affect the tourist industry as well. Hence, steps taken have to be weighed cautiously and it is assumed that education would eventually prevail over harsh punishment. As such, campaigns and negative banners located in strategic locations would benefit the tourist nation in the long run. Additionally, the best solution for these nations is to have the presence of police as a deterrent for the alcohol consumers. The presence of the police would throw caution to the unruly tourist.
    3.The proprietors of bars and clubs are contributing to the foolish actions of drunk tourists. This is unfair, as they do not take any responsibility for the after effect of the product they provide. This leaves no one but the government to intervene and ensure the situation is once again under control using up their revenue instead. This revenue are from the expense of taxpayers that mostly have nothing to do with the problem at all and are simply bearing the cost of the acts of irrational tourists. Therefore, the negligence of the external costs causes the private cost to be higher than the socially efficient output value.
    *Continuation of 3rd question – 2nd part
    No it does not. As evident from the reasons above, the private cost would not reflect the social cost. In fact, the private cost would be higher as the cost of externalities isn’t taken into consideration by those bars and pubs.

    -Mirren

  223. Mmecathumon 19 Dec 2011 at 10:17 am

    Hi Rory,

    I agree with your answers. They are simple and straight to the point and easily understandable. However, don't you think that by taxing the alcohol, it would decrease the amount of tourist in that area? Yes, taxing alcohol is a great step as this really ensures it is consumed under control. However, as the question relates it to the tourist industry, wouldn't decreasing demand be a negative aspect of the outcome of the situation?

    Mirren

  224. Rueveydeon 20 Dec 2011 at 5:52 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    – Overconsumption of alcohol is a negative externality of consumption; so yes, it is a market failure.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    – they could increase the taxes on holitays at the resort communities
    – they could increase the taxes on alcohol
    – they could make alcohol illegal

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    – If the taxesl on alcohol were increased, teh taxpayers on other parts of these nations would also have to pay for increased prices
    – Vandalsm caused by drunk tourists needs to be paid by the taxes (normally all citizens of the nation pay this)
    The private cost doesn't reflect the social cost because the social cost includes the negative externalities, so the social cost is bigger than the private cost.

  225. Sakshion 28 Dec 2011 at 6:35 am

    1.Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption of alcohol is a type of market failure as alcohol is not being efficiently allocated. Its overconsumption is leading to a welfare loss. It is a negative externality of consumption as its negative effects are initiated at consumption.

    2.If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    The government could set a minimum price per unit of alcohol in those areas in order to discourage consumers. They could even add tax so that the extra money could go to the government in order to fund public projects. The government could set a limit to the amount of alcohol a person is allowed to purchase in those areas. The government could maybe appoint bouncers to ensure no rowdy behavior takes place. The government cold use advertising to promote anti-drinking.

    3.How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors of bars and clubs in resort communities are benefitting as they are ones receiving profit from all the alcohol sales without having to pay for damages as this is done by taxpayers. The private cost of running a bar is a lot lesser than the social cost and thus a negative externality is created. The private cost is merely the financial cost plus some other things like cost of repairing vandalism; while the social cost is a lot more : vandalism, rowdy behavior, crimes and poor judgment as a result of alcohol etc.

  226. skalra2on 28 Dec 2011 at 6:43 am

    @ Samantha
    I thought your idea about placing a limit to the amount of alcohol that could be bought was a good one. But it made me wonder whether black markets could arrive as a result of this? This could go on to have negative effects of a bigger proportion.

  227. Konstantin Frankon 03 Jan 2012 at 10:25 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Overconsumption is definitely a market failure, as it is a missallocation of resources. As the word overconsumption says, and the social costs of consuming alcohol are definitely higher than the private costs, it is a negative externality of consumption. It is not only the social benefit (actually there is no social benefit when someone gets drunk) the social cost is way higher when things begin to get wrong like operations or reparations of damaged properties, than the private cost of buying a bottle of Vodka.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs ?

    What the tourist nations probably want to achieve is a shift of the demand curve to the left, as at the same price, less alcohol will be demanded, which would reduce the overconsumption of alcoholic beverages. By negative advertising, like with the pictures seen above, some people might stop drinking that much. Another way would be taxes on alcohol, bought from foreign people in the resorts, so the local people would not have to pay the extra tax and therefore not be punished for the tourist’s behavior. A very strict and harsh attempt would be banning of alcohol for tourists, which will probably never happen as too many people earn money from it.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    The proprietors benefit from other taxpayers expenses, as it is mainly their fault that tourist get drunk (of course it is the tourist’s fault getting that drunk, but the proprietors provide it to them). The community has to spend money on cleaning the streets from the trash produced by drunk people, to keep the hospitals running and the police needs to be paid if there are any conflicts. A souvenir dealer has therefore to pay for something he did not cause at all and he makes not profit with at all. The private cost does definitely not reflect the social cost, as the proprietor of a bar gains more by selling that much alcohol. The drunk people impose costs to society and society (not only the proprietor and the drunk people) have to pay for it.

  228. Konstantin Frankon 03 Jan 2012 at 10:29 pm

    Hi Mirren and Rory,

    I think Rory's suggestions to limit the consumption of Alcohol are very good. However, Mirren's idea, that taxing would decrease the number of tourists in that area is valid, too. I think it needs to be evaluated what is better for society and also the environment. More drunk tourists and higher revenue, but also higher costs for the "cleaning", or less tourists, less alcohol, less revenue, but also tremendously less costs for "cleaning". I think by taxing or banning alcohol a completely different type of tourist could be attracted by advertising it as "sustainable tourism" etc.

    Konstantin

  229. Daughtryon 23 Apr 2012 at 4:42 am

    Không có ý ki?n gì ngoai vi?c m?i xem c?a tôi

  230. Yadaon 30 Nov 2012 at 6:35 pm

    1) Overconsumption of alcohol is a market failure as it suggests the overproduction of alcohol, a demerit good, that is essentially enabling the overconsumption of alcohol. This overconsumption in itself is a mixed negative externality, which is initiated in consumption and can be received in both consumption and production. How? For example, the two drunk women who threatened to open the cabin door in the article could have disastrous impact on the quantity demanded of airplane tickets for the airline, which is a producer (negative externality received in production), as well as causing distress to the neighboring passengers (negative externality received in consumption). As the article explains, the overconsumption of alcohol means that the private benefits of the alcohol drinkers are far greater than the social benefits, and thus the quantity demanded and produced must decrease in order for social benefits to equal private benefits.

    2) It is extremely hard to crack down on drunk tourists. On the one hand, as many people have said before, the government could severely tax, implement an extremely high price floor, or ban alcohol. However, this is almost impossible for the government as the government cannot implement this ban in every single alcohol producer, and there will always be a black market which sells alcohol at a lower price than the high price floor (but higher than the equilibrium price). Also, if the tax becomes too high, then tourists will go to other countries for alcohol and create problems for the government of those countries. Banning is also extremely hard to implement because the government will have to spend a lot of revenue on police in order to implement the ban.
    On the other hand, the government could instead subsidize negative advertisement of alcohol and education on alcohol in order to shift the MPB curve to meet the PSB, and decrease the quantity demanded. However, it is questionable how effective this method is.
    It is almost impossible to make sure that there are 0 drunk tourists in a country, but using a combination of taxes and negative advertisement, the government will be able to greatly decrease the quantity demanded of alcohol, and drunken tourists.

    3) Bars and clubs in resort communities are benefiting because they do not have to pay for the negative externalities and pay the social cost (i.e. hospitalized victims of drunken rapes) which are covered by the government (hospitalization). However, due to the revenue spent by the government on covering the social cost, the government will need to compensate by increasing the amount of tax. This will be detrimental for the taxpayers who had nothing to do with the production of negative externalities in the resort communities, and will result in dissatisfaction.

    4) The private cost of running a bar does not reflect the social cost. The private cost of a bar may entail staff, price of alcohol and other resources, and light and rent bills. However, the consumers of the bar may go off and harass other people, deface buildings, or do other crazy things that cause negative externalizes to passerbys who are not consumers of the bar. Therefore, the private cost is much lower than the social cost.

  231. cpolackon 30 Nov 2012 at 7:37 pm

    1. Overconsumption of alcohol can be considered a type of market failure because of the externalities and effects it has on other people and society. Alcohol, when consumed excessively, can lead to drunken behavior. This behavior can potentially cause damage to society in the form of damaged property, injuries, or death. The extra costs imposed on society by the drinker can lead to costs higher than the money gained from the sale of the alcohol in the first place. Because of this, overconsumption of alcohol can be classified as a negative consumption externality.

    2. Tourist nations can attempt to solve this issue by reducing the demand for alcohol, thus decreasing the amount of damage and issues caused by the drunk tourists. A simple action could be to impose a tax on alcohol for foreigners, thus increasing the price of alcohol and discouraging its purchase. Th tax could also be imposed equally for all consumers, even those residing in the country. The country’s government could also attempt to advertise responsible drinking by tourists, which may also decrease demand, as some countries have done including Greece. A more drastic option would be to limit the amount of tourists coming into the country. If demand cannot be decreased to a level that matches the costs on society (Marginal Social Costs curve), the government can keep possible people from entering the country entirely. However, this solution would most definitely have an impact on the tourism industry of the country.

    3. Most of the businesses selling alcohol to the tourists, including clubs and bars, will gain a significant amount of revenue. The negative externalities to society caused by the drunken tourists will affect society as a whole, forcing most people to pay a share of the costs. For example, a drunk tourist may injury someone else or himself, thus requiring health care money to pay for the care. Taxpayers will be forced to pay for a problem that resulted as an effect of overconsumption of a demerit good. However, even if the bar that sold the alcohol to the man is forced to pay the same amount of tax as other taxpayers, the revenue they gain will more than compensate for the tax cost. Therefore, the business will continue to sell as much alcohol as possible, even though society receives no revenue and many costs. The business only pays attention to its private costs (MPC curve) and does not compensate for the costs to the tourist country’s society (MSC curve).

  232. cpolackon 30 Nov 2012 at 7:52 pm

    A response to “# Yada” ‘s comment:

    I completely agree. It is very difficult to stop the consumption of alcohol entirely in the country, so the government must use a variety of methods in order to get the best scenario possible.

  233. Yadaon 02 Dec 2012 at 12:53 pm

    Response to “# cpolack.”

    I like how instead of focusing on trying to decrease the quantity demanded of a product within toursits, you focused on limiting the amount of tourists coming in every year.
    This has been the case of Bhutan, and the locals there are one of the happiest people on the planet (as measured by Gross National Happiness).

    However, do you think there are some cases where the restriction of tourists will impact the country more than just in its tourism sector?

  234. Yadaon 02 Dec 2012 at 12:53 pm

    Response to “# cpolack.”

    I like how instead of focusing on trying to decrease the quantity demanded of a product within tourists, you focused on limiting the amount of tourists coming in every year.
    This has been the case of Bhutan, and the locals there are one of the happiest people on the planet (as measured by Gross National Happiness).

    However, do you think there are some cases where the restriction of tourists will impact the country more than just in its tourism sector?

  235. kkozlovskison 02 Dec 2012 at 9:42 pm

    1. I think that alcohol overconsumption is a market failure, it could be classified as a negative externalaties of consumtion, because the MPB are higher than MSB, this means that the consumer is beneficting from it, but the society is the looser, and this is why it’s negative externalaties of consumrtion.
    2.They should somehow lower the demand for alcohol, this could be achieved by increasing the price in this city,in this way it will help the whole economy, because it will also decrease the demand for alcohol made by the citizens, this way there would be lower negative externalities of consumption for the government. The prices could be increased just in this region, I know it would be hard, but it may work, I think that there’s a possibility of smuglling the alcohol in from other places, but in long term it wouldn’t be a problem.
    3.The bars and clubs would benefit from all this, because their revenue would increase, because the price for one unit would increase. They would also benefit from that they sell this booze, and when the clients are drunk and make expenditures for the government,e.g. break benches in the park, they are not responsible, and in this way they don’t need to pay for the negative externalaties of consumption, which is paid bt the society.
    4.I believe that they do, because running a bar in Greece has low private costs,this means that there will be a high demand for booze, this means that there will be many drunk guys fighting eachother and breaking the law each moment they move, this means that the social costs will be high. But if the prices would have been lower then perhaps there wouldn’t be so much drunks making mess on the streets, then the social costs also wouldn’t be so high. This means that the private costs are reflected on social costs. As this article is really old, and we know that Greece now has gone down the bubble, we can say that running this business has really high private costs and probabbly there are no social cost,because novadays Greece economy has fallen apart, and there’s a market failure, accually we could say that the whole economic system has failed, this means that now the private costs doesn’t reflect on the social costs.

  236. clundon 03 Dec 2012 at 8:58 pm

    I would consider the overconsumption of booze as a consumer market failure, since the high amount of alcohol bought/consumed leads to great social negative externalities, such as unwanted pregnancy and death. If the tourist nation really wanted to limit the amount of drunk tourists, they could raise the price of the alcohol (because it would lead to a decrease in demand) or they could put a maximum unit of alcohol allowed to be sold per. Person.
    The proprietors are benefitting from other taxpayers around the country because they need, big police forces in Malia, to be able to control the tourist who gets to drunk (since the police are paid by the government). The private cost of running a bar reflects on the social cost because when the consumers (the tourists) run around in the streets and vandalize things and make noise etc.

  237. Alexon 03 Dec 2012 at 9:55 pm

    Personally I find the overconsumption of alcohol to have a great negative externality of consumption and therefore be a form of market failure. This negative externality is reflected by the statistics which were given in the article “in a 12-month period in 2006 and 2007, 602 Britons were hospitalized and 28 raped in Greece, and that 1,591 died in Spain and 2,032 were arrested there.”.
    It would be relatively easy for the governments of these tourist nations to remove the issue of drunk tourists by creating price floors, taxing, or putting regulations in place to stop the larges scale consumption of alcohol. They could potentially do this by charging a minimum of a few dollars per drink, or taxing the drinks to increase government revenue and decrease demand for alcohol, or at the same time they could institute laws and non-price determinants of demand which would effectively decrease the demand as well.
    An example of this that constantly occurs back home in the Bahamas is when a tourist walks into a bar, buys a large amount of alcohol, then proceeds to walk out onto the beach with his friends to drink it. Once they have finished fighting with other tourists, and trashing the beach they leave on their flight the next morning, at no expense to the bar. This means that the marginal social cost is way off from the marginal private cost meaning that the society has to pay a great deal more for the antics of the tourists than the bartender will make off of them. Some may argue that the bartender as a member of the community also has to deal with the negative side affects of drunk tourists, however as we don’t pay tax in the Bahamas, and the tourists cause trouble outside of the bar, the bartender suffers far less.
    Though if we were to compare this to a place like Malia, in Greece we would likely see the same negative externality of consumption however the bartender would likely be more inclined to deal with the drunks leaving his bar, as he would feel the affects of their hooliganism far stronger.

  238. Alexon 03 Dec 2012 at 10:01 pm

    Reply to “#Yada”

    I enjoyed your post, especially your answer to the first question where you use the very valid example of the two woman who had a disastrous affect on that flight. It does seem that the negative externalities of production which are associated with the consumption of alcohol are great, however there have never been any major movements by the government against the consumption of alcohol –except for of course the prohibition in the United States which eventually came to an end– which goes against what we were taught. Though that was an interesting thought regarding how the government could subsidize the efforts of companies that already had the infrastructure in place to combat the spread and poor usage of alcohol.

  239. jyoungon 04 Dec 2012 at 3:38 am

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Overconsumption of alcohol is a market failure because because there is an overproduction of alcohol, in other words a misallocation of the good. To be more precise it would be classified as a negative externality of consumption. The social benefit is very low where these tourists are being rowdy and being damaging to property and people. Also when compared to the private benefit social benefit is low because firms are making money off all the alcohol they sell.
    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The governments of these tourist nations have a number of options in how they can intervene. In the resort communities they could impose a higher tax on alcohol either for everyone or just tourists. This would increase prices decreasing demand which in turn decreases consumption and hopefully drunks. They could use negative advertising through various sources of media educating people about the danger and consequences or alcohol, including legal obligations of tourists. These could be leaflets or radio/tv ads. Governments could require tourists to sign an agreement to drink responsibly during there stay. If the nations really wanted to crack down they could restrict the number of tourists visiting their country (which could very well have negative impacts on the rest of the economy) or ban alcohol altogether in the resort communities. They could also put more drastic legal options on the table.
    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    Proprietors of the bars and clubs in resort communities can benefit because of all the alcohol that tourists buy from them which increases revenues and probably profits as well, not only from alcohol sales but probably from other expenses that these tourists pay for when under the influence. The taxpayers have to pick up the bill for the police force who then has to discipline the drunks, they are also paying for everything else publicly funded (including replacing damaged property) while the tourists pay much less tax if any.Private cost does not reflect social cost in this case because the social cost is much higher and probably does not cause as much damage to the business as to public property and other people. These bars are actually making a profit whereas social benefits definitely do not outweigh social costs.

  240. jyoungon 04 Dec 2012 at 3:55 am

    Reply to: # kkozlovskis

    I think you had a very comprehensive review of the questions and I liked the way you came up with further consequences for government interventions like smuggling and a black market for alcohol. It is a possibility if taxes are high enough or there is a prohibition. It was a very interesting article and is a real world example of as you pointed out a firm benefiting from all the revenue when the drunkards way on the government and have a high cost. All of us have come up with numerous ways to fix the problem by decreasing demand or supply for alcohol to fix the misallocation but despite alcohols dangers, governments seem to seldom take action nowadays.

  241. bchoion 04 Dec 2012 at 6:23 am

    Over consumption of alcohol is a market failure and can be classified as a negative externality of consumption. The result of over consumption of alcohol leads to drunkenness, which cannot be controlled unless he/she does not over drink. It could be bad for the people and property around them.

    If the tourist nations were serious enough to crack down on the drunk tourists, there are many ways the government can intervene. Firstly, the government could impose a much higher tax or increase the overall price of alcohol. That would certainly decrease the demand for alcohol. Also the government could release a more strict regulation about tourists drinking alcohol when compared to a native citizen.

    The proprietors of bars and clubs in resort communities benefit at the expense of taxpayers from other parts of the tourist nations because they have two sources of revenue. Tourists are more inclined to buying alcohol until they are “drunk” which gives the proprietors tons of profit, but also when people are “drunk” they intend do things regretful, financial wise. The private cost does not reflect social cost, because the bars only get profit from the drunk customers whereas the public receives the bitter end of the stick. The public suffers the idiotic acts that people do under the influence.

  242. kmingeeon 04 Dec 2012 at 8:28 am

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Yes. It could be classified as oversupply of demerit goods.
    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could place a tax on alcohol in order to decrease demand. They could also advertise the bad points of alcohol. This would discourage consumption and also would decrease demand for alcohol.
    • How are proprietors of bars and clubs in resort communities benefitting at the expense of taxpayers from other parts of the tourist nations?
    While taxing/advertising would decrease consumption, there would still be high consumption. However, tax money from other parts of the tourist nations would have to spend their tax money funding the advertising or paying more tax unnecessarily. Also, proprietors of bars and clubs are not responsible for the damage that the tourists cause. Instead, the money comes from taxes paid by taxpayers.
    • Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    No. Bars only care about what happens inside the bar. For example, how much the customer spends at the bar. As long as the customer isn’t causing a problem inside the bar, the bar runner could care less what he/she does outside) in society.

  243. kmingeeon 04 Dec 2012 at 8:29 am

    reply to #bchoi

    I agree that the public is the one who has to deal with the idiotic acts of drunken people. Bar runners only care about the profit!

  244. aleeon 04 Dec 2012 at 9:13 am

    1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Over consumption of alcohol is considered a market failure and would be classified as an oversupply of demerit goods. The government believes that drinking is harmful to society and wishes that it would be consumed to a lesser degree, or not at all.

    2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The tourist nations would invest more money on establishing police forces that would arrest those who are drunk. They could also launch campaigns that educate people on drinking responsibly or try and reduce consumption by enforcing a tax. They can also try to limit the sale of alcohol, but if the problem gets worse, they can even consider making the sale of alcohol illegal.

    3. How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    The proprietors of bars and clubs are not responsible for any damage done to property or the health of those who are consuming alcohol. Therefore, they are gaining from the revenue that they make. However, the taxpayers from other parts of the tourist nations must pay for the damage made on public property and hospital fees that are paid through health care.

    4. Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The private cost of running a bar in a place like Malia does not reflect the social cost. The private cost is much lower than the social cost because it is added with the negative externalities.

  245. aleeon 04 Dec 2012 at 9:19 am

    Reply to # jyoung

    I agree with the methods that you have chosen in order to reduce the consumption of alcohol. But unfortunately, it’s not as easy as it sounds. To make all of these methods efficient and useful, a lot of money must be spent on this particular issue. This would lead to a neglect in other parts of the nation that might need this money.

  246. ykim2on 04 Dec 2012 at 10:00 am

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    o Is overconsumption of alcohol a market failure? I would agree that overconsumption of alcohol, because of the negative cases, crime, and even death, is a market failure. Agreeing with #Joel, negative externality in consumption would be the best classification.
    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    o I agree with #alee about the tourist nations investing “more money on establishing police forces that would arrest those who are drunk.” The economic actions that the tourist nations could take in resort communities where most of the trouble occurs is to ban alcohol and make it illegal. If it is causing so much trouble, then it should not be allowed.
    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    o The proprietors of bars and clubs in resorts communities benefiting at the expense of taxpayers from other parts of the tourist nations because whenever a person who consumed a lot of alcohol and damaged some property, the proprietors of bars and clubs in resort communities are not responsible for the damage caused by the drunk tourists. From #kmingee and #alee, the money comes from taxes paid by taxpayers, and I would agree so too.
    • Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    o In places like Malia, Greece, the private cost of running a bar does not necessarily reflect the social cost. Agreeing with #bchoi’s comment about the public “who has to deal with the idiotic acts of drunken people,” the bar could careless of what happens outside the bar. The bar cares more about what happens inside and more of the profit.

  247. ykim2on 04 Dec 2012 at 10:08 am

    #Anair2, I like how you mentioned that ” it is at the expense of tax payers because these tax payers as, it is their funding put in place for the mending of the problems they bring and this affects the development of the country.” It gives a clear answer to the problem.

  248. nwarneron 04 Dec 2012 at 3:05 pm

    The over consumption of alcohol is a market failure. The over consumption of alcohol is an example of the over production of a demerit good. In addition it is an example of the effects of externalities on the market. In this case the particular this is an example of the effects of negative externality of consumption on the market. This is a particularly large example of a market failure as resulted in the statistics released by the British Foreign Office which say, “that in a 12-month period in 2006 and 2007, 602 Britons were hospitalized and 28 raped in Greece, and that 1,591 died in Spain and 2,032 were arrested there.” This alarming statistics show the extent of the problem as it says that over 4 Britons die each day in Spain and over 5 are arrested each day. This however, could be prevented if the resort community decided to institute taxes or price controls this would decrease the demand for the alcohol. This decreased demand would discourage the binge drinking and would also help to prevent the problems that are caused by that action. Yet this action would have negative consequences on the bars and clubs that benefit at the expense of taxpayers. This is because the taxpayers are affected by the marginal social costs by the actions of the tourists while the bar owners receive the higher costs based on the marginal private cost. They are benefiting as they receive the income based on the sale of the alcohol but they do not have to cover the costs of the damage that is caused by the drunken tourists. The cost of the private cost of a bar is not the same as the social cost of running the bar. This is because there are low costs for the alcohol which causes the demand to be high. However, the social costs of running the bar are much greater as the damage to the community is worth a much greater value than the cost of the alcohol. This causes a huge welfare loss based on the cheaper alcohol. If the cost of the alcohol was increased than the welfare gap would close as the private costs would increase. As the private costs increase the social costs would decrease as the higher private costs would decrease the demand which would eliminate some of the binge drinking.

  249. jduplessison 04 Dec 2012 at 4:18 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    I believe that overconsumption of alcohol is a market failure. I think that it can be classified as an excess of demerit goods.
    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    I believe that the tourist nations should not close down the resorts. What they should put into place are certain measures that will prevent people from going too far overboard with alcohol. This can be a limit at a bar and there also need to be alcohol intake checks when the people then go on to a different bar. They will be checked before entering.
    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    The owners of the bars and club are taking advantage of the English drunkards through supplying them with unlimited alcohol. The drunkards then go out on to town and negatively impact on the community.
    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain
    I believe that the social cost is much higher than the private cost when running a bar in Malia. The impact on the community is just too great in my opinion.

  250. jduplessison 04 Dec 2012 at 4:22 pm

    # ykim2 I agree with the fact that alcohol consumption needs to be limited and that the bars often simply don’t care what you do outside of it.

  251. nwarneron 04 Dec 2012 at 4:41 pm

    Reply to #jyoung
    I really like your comment on how we need to reduce the dependence on alcohol. A tax could be the solution in this instance due to the major social cost based on the binge drinking. However, the tax would not reduce the drinking a lot as the demand for alcohol especially on vacation would be very inelastic so more drastic measures such as price minimums may have to be introduced if they want to reduce the social cost. However, then the cost of the lost tourism is my reason why I believe that a new tax or price control should be caused. This loss of tourism could decimate the local economy which would cost many people their jobs. This increased unemployment is more of a social cost than damage caused by the drunken tourists.

  252. rparsonon 04 Dec 2012 at 4:58 pm

    Is over-consumption of alcohol a market failure? If so, what type could it be classified as?

    I think that this can be seen as an oversupply of demerit goods, and therefore a market failure. However, I think that the real problem here is the mindset of the tourists – who are unwilling to look past the short term personal benefit from drinking and the consequences for both them and the society which they are visiting.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    I think that one possible solution would be to increase taxes or set a minimum price on alcoholic beverages. However, alcohol is fairly price inelastic, and so this would likely have little effect aside from perhaps making tourists more disgruntled and therefore less likely to visit the same places again. A better solution would probably be to increase police presence in the affected areas in order to reduce rowdiness and make it easier to arrest drunkards before they have a negative effect on the area.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?

    They are benefiting in that they are able to drink and ‘party’, which costs the local taxpayers because it is they who fund the local law enforcement which must deal with the rowdy tourists.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    It most likely does not, as the bar itself makes the full profit from selling alcohol to the tourists while the social cost is shared across the entire population, in a ‘tragedy of the commons’ type scenario.

  253. rparsonon 04 Dec 2012 at 5:03 pm

    In response to #alee, I like your suggestion of increasing police forces, as I feel that this could prevent overly rowdy and destructive behavior without having too great an effect on the tourism itself.

  254. clundon 04 Dec 2012 at 6:28 pm

    # Dennis.echl.f09

    It’s true that if there’s added tax to the price of alcohol it will make less people want to buy it, which is the purpose of the tax, and it’s the same that would happen if you put a limit to the amount of drinks a person can buy -you decrease the quantity sold. So I don’t agree with you that the tax would make the market collapse and the limit (loft) wouldn’t since it almost the same thing, that will happen.

  255. cturkzadehon 04 Dec 2012 at 6:48 pm

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Overconsumption of alcohol is indeed a market failure for the simple reason that the over-consumption of alcohol by the people is creating more costs for the societies (and police forces) of the nations in which the tourists get themselves into trouble. In other words, society has to pay more costs for repair, health care…because the people are getting overly drunk and lose consciousness and cause fights and deaths. The overconsumption of alcohol is a negative externality, as it causes losses to a third party, in this case, society/the government.
    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    If these tourist nations were extremely serious about lowering down on drunken tourists, they could simply tax the price of alcohol, ban it, or simply price it at a higher price. This could help because the consumers will not be willing to pay more for alcohol that they could get at a cheaper price in their own country. Although banning the alcohol could be detrimental to the government, if they really want to cut back on drunken tourists, this is eventually the means by which they could do it. The government could also try negative advertising to reduce alcohol consumption; however, this seems way less effective.
    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    The proprietors of these bars and clubs are benefiting from taxpayers in other parts of the tourist nations since the tax is placed on the alcohol. They are hence selling the alcohol at a higher price, causing more profit for them. Additionally, these people from other parts of the nation will move to the resort communities to get cheaper alcohol then where they were before, causing more demand.
    • Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The problem with running a bar in a place like Malia is that there are a lot of tourists who come there to drink because the alcohol is cheap. Hence, there are a lot of private costs for the bar associated with this. They have to pay for the liquor, they have to pay to clean up… However, not only are there private costs for the bar, but there are also social costs. These people get drunk so many of them get into fights (meaning they have to go to the hospital, reflecting on health care problems), many get too unconscious and kill themselves, many litter and throw the bottles on the floor (causing the government to pay people to pick them up). There are problems of noise pollution and environmental pollution. This is very serious and it causes families to stay away from these tourist spots for their safety.

  256. cturkzadehon 04 Dec 2012 at 6:50 pm

    In response to #rparson, I agree with your main points. I like it how you recognize that because alcohol is price inelastic, placing taxes or minimum prices on alcohol would not change much at all. Finally, I agree that the tourists are largely to blame in this situation, not the managers of the bars or the government.

  257. Jaime Sanchez Capillaon 04 Dec 2012 at 6:52 pm

    Over-consumption of alcohol is definitely a for of market failure. This is due to the fact that it’s creating an external cost which makes the MPB curve exceed the MSB one. This is a negative externality of consumption since the negative spillovers are affecting only the consumers and society, not the producers.

    The resort communities could take meany measures in action in order to control this. Some of them could be taxing the alcohol higher in those places, offering less quantity recipients, offering alcohol only in bars and places where the people can be more “controlled” while drinking. A good measure I’ve heard lately comes from Australia. There alcohol can only be found in stores that only sell this good, therefore in some special days where the government thinks people might get uncontrolled (Like national parties) these stores close, so the alcohol level in the streets is not as high. Due to this though, some people make private storage at their homes, but this wouldn’t be possible for tourists in controlled hotels, specially if they are short term tourists.

    The owners of bars and clubs benefit from this since their benefits highly increase during the biggest tourism dates. This benefit is insignificantly affected by the social costs the tourists produce to the owners, a social cost that is in the other hand severely affecting the government. This can be seen by things like the health care needed by the people that got drunk enough to affect their health badly. In some places like Spain, health care is supported by the government, and this is a high cost since the coast of Spain are crowded by English tourists, place like Benidorm where drunkness is not the only trouble they create (This is a wide topic but they are also over-consuming the water for example). In fact it’s said at the beginning that 1591 tourists died and 2032 were arrested in Spain.

  258. Jaime Sanchez Capillaon 04 Dec 2012 at 6:57 pm

    In response to # rparson

    I mainly agree with your points but, Don’t you think though, that the minset of the tourists towards alcohol is a problem based on how easy over-consumption is for them due to a weak government policy? Also since as you said, setting a minimum price on the beverage would affect the tourists in some way, although it wouldn’t probably be by decreasing them from getting drunk at other places where alcohol would be cheaper.

  259. marksurninon 04 Dec 2012 at 7:06 pm

    • Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Definitely yes. The overconsumption of alcohol could be classified as a negative externality of consumption. Young tourists over-consume the demerit good (alcohol) in large quantity, caring only about their private benefits, and not taking the social benefits into the account. Thus, the marginal private benefit of alcohol consumption exceeds the marginal social benefit, representing an over-allocation of resources towards alcohol.
    • If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The government could impose indirect taxes on alcohol, in attempt to reduce the consumption of it. However, it should not forget that alcohol has inelastic demand, and the imposition of taxes would not decrease the demand of alcohol significantly. This would also create black market, where alcohol would be illegally imported from the nearby countries.
    They could also use advertisement in order to raise awareness about alcohol consumption among the youth, which will hopefully educate them and make them more responsible drinkers.
    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    Since there is a high demand in alcohol among the tourists, the consequences of that are usually very detrimental to the society. For example, if drunk people get into a fight, then the police and perhaps even ambulance intervention is needed. The government gets the money to maintain these services from the taxpayers, who are not the cause of the accidents. Similar situation could be seen in the bars, but only when an accident occurs there. Generally, the consequences of over-consumption of alcohol take place outside of bars and clubs in the resort times. Thus, the proprietors of bars and clubs benefit from the sales of alcohol, whereas the society is obliged to pay for all the expenses of the consequences of over-consumption of alcohol.
    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The private cost does not reflect the social cost in this case, as the proprietors do not lose consumers, because the people who get arrested are tourists, who will leave anyway, and the new ones will come. The social costs happen outside the bars and clubs, and so the proprietors will not suffer from the social costs at all, as they are not responsible for them.

  260. marksurninon 04 Dec 2012 at 7:16 pm

    In response to #cturkzadeh, great job! I agree with you that it is not only the tourists, but the citizens of the same country who also come to resorts and over-consume alcohol. I wonder if the taxpayers actually know that their money goes to cleaning up after the drunk tourists, because usually we, the taxpayers, do not realize that our money is being used for these purposes, whereas it could have been used for something else, like education or health care.

  261. alexon 04 Dec 2012 at 7:51 pm

    Alcohol is considered as a market failure. It is a negative externalities of consumption. The reason why it is a negative externatlity is because it give profit to the companies that make it however is bad for the drinkers health. Also, it creates a more cost for society. For example, health care, police officers, and etc… are needed because of over consumption of alcohol. The government can also increase the tax on alcohol to prevent less people from buying it.

    The bars and clubs in resort communities benefit from this is that they can higher the price for alcohol. The reason why they can do this is because as more tourist come to resort communities, they’ll go look for the cheapest alcohol so, they will go to the bar. No, it will not reflect the social cost because most people that get arrested are tourist. They will only be visiting for couple days and leave back to where they originally came from so it will not reflect of social cost.

  262. ylahamon 04 Dec 2012 at 8:36 pm

    Something really should be done about alcohol, it has such strong negative consumption externalities, and attempts to reduce demand nearly always fail. And we know what happens when it is banned completely :P. Anyone have any ideas on what could be done to convince consumers to reduce alcohol consumption or learn to drink responsibly?

  263. Deborahon 04 Dec 2012 at 9:35 pm

    1. Yes over consumption of alcohol is a market failure and it is classified as a the existence of negative externality.

    2.If tourist nations were serious about craking down on drunk tourists they may increase the tax on alcohol and post up signs that prohibit alcohol. They would tax alcohol producing companies. In response, alcohol companies would increase the price of alcohol. The increase in the price of alcohol would prevent the people from consuming more alcohol.

    3. The proprietors of bars and clubs in resort communities are benefiting at the expense of taxpayers. They are able to increase the tax on alcohol for tourists . Also they may be able to increase the cost to enter the bar and clubs for tourists. Yes and No. The company increases the tax on alcohol and that may also affect the citizens along with the tourists. No it might not affect the social cost because the tourists are not part of country and are charged differently.

  264. ykim3on 04 Dec 2012 at 10:30 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    – Yes, it is because alcohol is treated as the one of demerit goods. Therefore, overconsumption of alcohol is the cause of a market failure.
    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    – They might be able to prohibit drinking to tourists. If they are not allowed to drink alcohol, there will not be any accidents caused by drunk people. Or it could impose high taxes to tourists to drink alcohol
    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    – They will be able to sell drinks to residents and if tourists pay higher prices to drink they will get extra benefits. I do not think it would affect that much because the change is only applied for the tourists.

  265. ykim3on 04 Dec 2012 at 10:32 pm

    # Deborah
    I also think that prohibiting is the best way to result the decrease crimes in short time. Even though it would be harsh and restrictive to the tourists, they will have no any chance to drink and cause any problems in the countries.

  266. kkozlovskison 04 Dec 2012 at 10:46 pm

    @#ykim3
    I tottaly agree with your point about alcohol beeing a demerit good, because it’s really overconsumed in these tourism areas. I also liked your point about prohibiting the aclohol for the tourist,but I see one problem,and it’s smuggling the alcohol in from homeland, or buying it from black market. I find your point really interesting, but I think it’s really unrealistic, because for the most tourists alcohol is a need, because without alcohol it’s not close to relaxing as they dreamed of.And tourists also won’t pay extra money for alcohol, because it’s not fair, and some may find racism in there.

  267. edubison 04 Dec 2012 at 11:10 pm

    Yes, over consumption of a product is a market failure; alcohol is a demerit good and therefore if it is over-consumed the MPB is greater than the MSB resulting in market failure. If the MPB is higher than the MSB of alcohol consumption this is a negative externality of consumption. The allocation of alcohol should be reconsidered if the amount people are drinking leads to “602 Britons…hospitalized and 28 raped in Greece, and that 1,591 died in Spain and 2,032…arrested there.”
    Tourist nations looking to reduce or eliminate the number of drunk tourists in the resort communities could raise the price of alcohol to discourage people from drinking so much, limit the number of drinks per person, or ban alcohol. Raising the price or banning alcohol would likely lead to alcohol being brought in from other sources, which is bad for profits in the resorts.
    Taxpayer money is used to clean up messes that drunk tourists create; this includes littered beaches and some medical bills. This money comes from taxes they pay to improve their countries, not clean up after tourists. The proprietors of bars and clubs in resort communities benefit because they are making a profit and do not have to clean up after the tourists.
    Private cost of running a bar in Malia, Greece does not reflect the social cost. New tourists will come, and according to the article will get drunk, so bars will not lose business even if arrests occur. The social cost is major disruption for locals, cleaning up, and taxpayers money assisting the visiting tourists. The private costs concern supplying the alcohol and paying employees.

  268. edubison 04 Dec 2012 at 11:11 pm

    @#Yada
    You said, “using a combination of taxes and negative advertisement, the government will be able to greatly decrease the quantity demanded of alcohol, and drunken tourists.” Would the number of tourists then decrease because of the less alcohol availability? Or would a different market of people be targeted as potential tourists? The Brits that visit would probably still get drunk, according to this article, since alcohol is often accessible even with restrictions in place.

  269. nexus18on 05 Dec 2012 at 12:15 am

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    Most definitely. As clearly shown by the graph the social cost far outweighs the social benefit, this market failure could be considered people taking their private needs above what is best for the rest of society.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    Placing a heavy tax, increasing the prices for producers of alcohol, reducing the amount of alcohol in the drinks, lowering the legal amount of alcohol one can have in the blood. There are many things the government could do that would regulate the amount of alcohol consumed by tourists.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?

    Those other tourist nations are paying taxes to fix the problems caused by the consumption of the alcohol sold by those clubs. So one could say that the clubs/bars are getting “raw” profit from their sales without having to face the consequences of their product.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    If the problem is so big I would imagine the private cost is nowhere near as close as the social cost. Looking at the big picture the private cost for the bars/clubs comes down to paying for the supply of beer, legal permits, rent, taxes and employment costs. Social cost is much more expensive with accidents, social disruption, destruction of public and private property along with even death.

  270. nexus18on 05 Dec 2012 at 12:47 am

    # ykim3

    Interesting points you bring up. In regards to what you posted it seemed like it would solve most of the issues regarding over consumption of alcohol by tourists, however it would be interesting to see what would be a more general solution, one that will be universally effective for both foreigners and locals. The article is mostly directed towards tourists though im sure locals also cause some of the trouble passed off as some tourists having too much to drink.

  271. dkim2on 05 Dec 2012 at 5:19 am

    The overconsumption of alcohol is considered as a market failure, and to be more specific, this should be classified as negative externality of consumption. It is because even though that more consumers may buy this product, too much alcohol is not good for one’s health. Also, consumers may get too drunk to the point where they disregard laws that are meant to keep themselves and others safe.
    If the tourist nations were serious about cracking down on the drunk tourists, then the governments can impose a levy on alcohol, but banning them wouldn’t be helpful. It is because the black market could make more profits thanks to the illegal alcohol. This is how the criminal organizations gained wealth and power during the Prohibition era in North America. Also, the government can impose new policies and enforce to limit the supply of alcohol so that people can’t get drunk that easily.
    The proprietors of bars and clubs in resort communities benefit at the expense of taxpayers, since that if the price of alcohol reduces, then tourists would be attracted to these types of places. As more and more people go to these bars and clubs, then the proprietors will gain more profit of these tourists.
    The private cost of running a bar may be lower than the social cost. Probably, in order to run a bar, a person will obviously need alcoholic beverages, tables and chairs as well as some other things that may make a bar look like a bar. The social cost may be more expensive since if people come out drunk, then they’ll usually disregard for rules and wreck havoc on society, whether minor or major. The police has to get involved and the government eventually has to step in to clean up the mess. The social cost is more expensive than the private cost of running a bar, in my opinion.

  272. dkim2on 05 Dec 2012 at 5:26 am

    To Konstantin Frank
    I agree with you on your answers to these questions. Essentially, it is the tourists’ faults in getting drunk in the first place. If the tourists didn’t choose to do this, then there wouldn’t be no need for the government to impose policies that are meant to control the supply of alcoholic beverages. Alcohols generally are not positive products, since people do get drunk if they have too much.

  273. avwon 05 Dec 2012 at 10:17 am

    Hi # aaxler2,
    You had very good points. I would just add that you mentioned “they could also make the communities dry by forbidding alcohol entirely.” I think this would be counter-productive because of the black market that would form. The amount of government officials who would be needed to control and regulate this ban would be immense and I think too much for a small resort nation to handle.
    Anna

  274. avwon 05 Dec 2012 at 10:18 am

    Yes, the overconsumption of alcohol is definitely a market failure. Here is clearly a situation where the consumption of a good (alcohol) is causing spillover effect on a third party, the native communities of the resort towns. These external costs might be loud noise from drunken tourists, increased crimes, and/or car accidents. Therefore, I would classify this as a negative externality of consumption.

    The government could enact high(er) taxes on alcohol. This is a well-known solution because is causes the price of alcohol to increase causing the quantity demanded to decrease, and this tax generates revenue for the resort nation as well. In order to internalize the externality, the cost to society must be calculated, which is often impossible, so a reasonable estimate must be made instead.

    The government is focusing its resources on these resort communities instead of concerning itself with any of the other countless issues. Also, the government pays for an increased police force to be at the communities, as well as paying for any accidents or defacing of private property.

    No, I don’t think that the private cost of running a bar in a place like Malia, Greece reflects the social cost, because the bars never internalize the external costs. The bars themselves might facilitate the drunkenness, but it does not directly cause the external costs. An example would be throwing a ball through a window and then blaming the company from whom you bought the ball. The bars do not (and should not) pay the external costs of their customers.

  275. davidn.tgson 05 Dec 2012 at 5:08 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Overconsumption of alcohol is a market failure, and more specifically a negative externality of consumption. Overconsumption of alcohol is a negative externality of consumption because it deals with a person, or a party, thinking only about their private benefits and not about the social costs on third parties and tax payers.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    Governments could decide to tax alcohol in tourist hotspots in hopes that the higher price might lower the consumption. (even though alcohol is an inelastic good) Or they might implement big fines to scare consumers away from drinking too much.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    The proprietors benefit from this situation because the tax payers cover the cost of the negative externalities. The producers do not loose welfare, only the tax payers and government.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    No, the private cost of running the bar does not reflect the social cost. As I said in question 3, proprietors of bars skip the social costs which are made by the people who drink there, and paid by the people through taxes. (I’m not sure if I interpreted the question correctly)

  276. davidn.tgson 05 Dec 2012 at 5:18 pm

    Hey # avw,

    I like how you mentioned the different types of externals costs that come from alcohol. I always forget about the ‘noise pollution’ and I thought that was an interesting add on. I also felt that your example of the baseball relating to drunken behavior accurate and easy to remember. It seemed to me that you were way against the bars paying any proportion of the external costs. I don’t have an opinion on this yet, but I’d like to know why this is your opinion anyway. Thanks!

  277. dmaticon 05 Dec 2012 at 9:57 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Yes it is. It is a negative externality of consumption because the person that consumes the alcohol is disregarding the well being of others. This is also shown in the graph, where the MSC is greater than MSB

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could do plenty of things. They could either increase the price of alcohol, Increase the price for producers or ban it completely (not likely to happen since these areas make the majority of their profits from the sale of alcoholic beverages.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    The low alcohol prices attract tourists and as they get intoxicated, they might destroy some nearby public goods. The taxpayers’ money is then used to fix this.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    The private costs are much smaller than the social costs. The bars only need to provide alcohol, while the people who get drunk disturb and disrupt society and the area around the bars.

  278. dmaticon 05 Dec 2012 at 10:01 pm

    # ykim3

    you made an interesting statement, although i think that prohibiting tourists to drink alcohol wouldn’t be a good solution because of the effects it would have for the local economy since these bars make a large portion of their profit from tourists.

  279. Aishwarya Jagadishon 06 Dec 2012 at 1:42 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    The overconsumption of alcohol can be treated as a market failure. The users of alcohol are more prone to involve themselves in road accidents, violence or damage to the environment. so alcohol is a negative externality where the private benefit is greater than the social benefit and the society has to bear the external cost caused by the usage of alcohol.
    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could reduce the quantity of alcohol sold. This can be done by either restricting the amount of alcohol sold to a person or they could impose a tax on alcohol. Alcohol being a addicting and inelastic good, its demand won’t change much due to an external cost but the government would at least get some money to pay for the external cost. But in some cases the government might ban the sale of alcohol. But that would not be an effective measure as it would lead to the emergence of a black market.
    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations?
    The tax is taken from all the tax payers by the government to pay for the external costs. But it is the owners of bars and clubs making profits by the increase in the demand for alcohol and also their other facilities like dancing, food etc.

    Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain. No the private cost does not reflect the social cost. Firstly the private cost would be gained by the owners of the clubs and bars and they would be paying just a small percentage of it as tax. The social costs are sometimes like lives of victim due to an accident caused by drunk person. So in this case the private cost cannot be taken as a replacement for the social or external cost caused by drinking.

  280. Aishwarya Jagadishon 06 Dec 2012 at 1:50 pm

    # ahamdock
    I like the way the way you went about with the questions and I can clearly understand the concepts of externalities by relating them with your answes. The answer about how the clubs and bars make profit and help help increasing the negative externalities is written in a very simple and understandable way.
    Good Effort!!

  281. xhuangon 06 Dec 2012 at 11:43 pm

    xhuang
    The overconsumption of alcohol is a market failure. It is the over-supply of
    demerit goods, and the negative externality of consumption. The overconsumption
    of alcohol causes drunkenness and crime actions, which will cost trouble and police
    force intervention. Government need to bear the cost of using police force and
    the drunk tourist themselves have to pay for their troubles – they will be fined, or
    repatriated and afford the price of ticket. The enjoyment they got from the trip will
    also reduce. So the marginal social benefit is lower than the marginal private benefit,
    thus a market failure exists.
    If the tourist nations were serious about drunkenness caused by alcohol,
    they would take economic actions to prevent it. There are some choices for them.
    First they can make advertisement on the negative influence of alcohol to reduce the
    consumption of alcohol. However, according to the article, advertising doesn’t seem
    to really work since many young tourists are prepared to accept the consequence
    before they drink. They were aware the result of drunkenness but they still risk
    it. The government can also make laws to limit or ban the supply of alcohol. The
    problem with that is that will harm industry, cause unemployment, encourage black
    market, and the difficulty of estimating the level of limitation. The government can
    also choose impose indirect tax on alcohol. However since alcohol is addictive, the
    elasticity of demand will be relatively low, therefore the consumption would not
    reduce in a significant amount and the tax will be passed to the consumers.
    The taxpayers benefit from the proprietors of bars and clubs in foreign
    country because they don’t have to pay for the negative externality. Although the
    Britain tourists were drunk and caused trouble, they were not causing trouble in
    Britain so the taxpayers in Britain don’t have to pay more tax to make up the cost
    caused by drunkenness. Plus, the more drunk tourists are in the foreign country, the
    less people in Britain will get drunk and cause trouble. So the exportation of tourist
    is actually reducing the negative externality within the country. That is another
    reason taxpayers were benefited.
    The cost of running a bar in a place like Greece reflects the social cost of that
    place. The higher the social cost is, the bigger the bar cost is. When the consumption
    of alcohol take place, there is a externality cost as people get drunk and cause
    trouble. This external cost added to the marginal private cost is the marginal social
    cost. The higher the marginal social cost is, the more limitation or taxation the
    government will make on alcohol, which will increase the cost of holding a par or a
    club.

  282. ywang2on 08 Dec 2012 at 10:00 am

    Is over-consumption of alcohol a market failure? If so, what type of failure could it be classified as?
    yes, I think it is, the over-consumption of alcohol means that alcohol is over-consumed, the best quantity of demand for society is lower than what the quantity of demand really is. so that it will cause the welfare lose, and a market failure. and I think this kind of market failure is one example of the Negative externalities of consumption since drinking alcohol has a bad external impact on the society as a whole.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    if the tourist nations were serious about cracking down on drunken tourists, I think the government from that place then should put more tax on the alcohol so that the price of the alcohol will increase, then quantity of demand of alcohol will decrease, so the welfare lose will be less than before since the people who buy alcohol become less. but there are also a lot of different ways to get less welfare lose, putting the tax on alcohol is just one of the way I think it’s good and easy to do.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.
    the owner of bars and clubs get benefit because they don’t need to pay for the external cost from selling the alcohol to the consumers. I don’t think the private cost shows the social cost, it’s lower than the social cost, because the owners do not need to pay for the external bad cost for the drunk consumers, instead the society pay for it.

  283. ywang2on 08 Dec 2012 at 10:07 am

    # Aishwarya Jagadish
    I like your point for the last two questions, it gives me an idea too, I like that :)

  284. mlayurovaon 09 Dec 2012 at 10:23 am

    Is over-consumption of alcohol a market failure? If so, what type of failure could it be classified as?
    The consumption of alcohol creates negative externalities, especially during holidays, when people try to have fun. Demand for alcohol rises and it become overconsumed. Usually it causes a lot of bad consequences starting from injuries and ending up sometimes with death. Thus, we can say that over-consumption of alcohol is one of the most common market failures.
    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could set a limit of amount of alcohol that can be baught by one person per one day, but to create that and to control it is too hard. Another way of doing that is setting taxes on alcohol beverages, thus making them less affordable and less buyable. Or, as it is in some countries, set a time when one can buy alcohol or not.
    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.
    Bars and clubs make a great revenue from selling alcohol, therefore, they get a lot of benefits from doing that. Usually prices for alcohol beverages are higher at the clubs and bars, which increases income. But drinking those drinks causes bad consequences, people don’t control themselves and usually break something or do wrong things, which lead to fine or destruction of something. So social benefit is much less that private benefit.

  285. mlayurovaon 09 Dec 2012 at 10:25 am

    # ywang2
    i don’t think that demand will decrease by a lot if government will set a tax for alcohol beverage, because it’s demand is inelastic in places that are popular among tourists.

  286. azacharjaszon 09 Dec 2012 at 6:30 pm

    Is over-consumption of alcohol a market failure? If so, what type of failure could it be classified as?
    The over consumption of alcohol is a market failure, it is an over-consumption of a demerit good and it creates negative externalities of consumption because when they are consumed by individuals, they affect third parties. It is a big problem because the drunk people very often are aggressive and they can be dangerous for other people. When somebody is travelling and visiting other countries he should he should respect the people from other countries and from the country he is visiting because he is a representant of his country and if his conduct is not appropriate he will create prejudice of the people from his country. When other people from that country will travel they won’t be welcomed because they people will think that they only know to drink and fight, it is a negative externality of consumption
    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    There is an easy solutions, they should create very high (strict) fines. If somebody is causing problems he will have to pay I don’t know 100$ 200$ If he pay big quantities of fines he won’t be causing problems or he won’t have enough money to pay more fines and he will go to the jail. After this I think that he won’t cause more problems .The same problems was hooligans from the stadiums in England but the government have created strict fines and now England have the safest stadiums in Europe.
    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.
    If they wouldn’t have benefits they wouldn’t do that, of course they benefit. l live in Spain and i have an house in the beach en every summer there are a lot of tourists from other countries specially from England and Germany and the owners of bars and clubs make great benefits selling the alcohol. they don’t have to pay the external cost so the marginal social cost of the production is greater than the marginal private cost.

  287. azacharjaszon 09 Dec 2012 at 6:41 pm

    # mlayurova
    In countries like Spain, Greece, Malia the tourism is the biggest part of the revenue of the government and putting and tax on alcohol is an easy way to increase the revenue. The government will say that it is in order to decrease the demand but they only want to increase their income. If you have been in this countries you would know that 2 or 3 more pounds make no difference for those people because they go to those countries to have fun (fiesta). To reduce the demand, they would have to pay 200 or 300 pounds.

  288. bdiaz17on 10 Dec 2012 at 5:09 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    Definetely, the alcohol market is enormous and it has many negative externalities, when people consume alcohol it has more negative effects, my point is, it can affect other people (third parties). Alcohol is really popular on holidays, family celebrations and parties, the consequences alcohol can bring are huge going as far as causing deaths (mainly car accidents, but the thing is that its not very easy to stop its consumptions, a raise in the price wont affect sales very much, therefore as # azacharjasz fines should be imposed, however I do not think that people should have a limit on how much they can buy, people purchasing alcohol are mainly adults hence be responsible and look after themselves.

    f the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The over consumption is a difficult thing to deal with because even if lets say they ban it people will still do it. Therefore I would not say its only a market failure, is also each individual’s failure for not controlling themselves, and leaving a bad image of them in other nations, and the tourist nations shouldnt be worrying on drunken tourists, its not their responsibility, a fine if you cause big disturbances would suffice to lower down the level of drunk people, but this should only be on more severe cases.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations?
    If they didn’t have benefits they wouldn’t do it, they benefit from them, every summer people go for summer holidays to have fun, go out, have some drinks with their friends, etc. A lot of these people are tourists and will probably buy more than usual therefore bar and clubs owners benefit the most from these, a lot of their income depends on how much they sell in these stages of the year.

  289. salvarezon 11 Dec 2012 at 11:42 pm

    • Is over-consumption of alcohol a market failure? If so, what type of failure could it be classified as?
    Yes, I think the over-consumption of alcohol should be considered a market failure. There are many reasons to why a market could fail, for example, negative externalities of consumption and over-provision of demerit goods. Demerit goods are the goods or products that are considered unhealthy, like alcohol, cigarettes, etc. If demerit goods are supplied in huge quantities, then it will have an impact on the population. Also it could be considered a negative externality of production, because it affects a third. If an individual is drunk and decides to drive, then they are risking a third person’s life.
    • If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    The government could control the prices of demerit goods. They could set a price floor on the products so companies would not be able to give an alcoholic product a lower price. Also they could set an excise tax on alcoholic products thus increasing its price and decreasing its demand.
    • How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.
    Proprietors of bars and clubs benefit because as the graph shows, the MPB exceeds the MSB, meaning the proprietor of a business is benefiting from the taxpayers. Taxpayers have to pay tax for the alcoholic products, so they get more money.

  290. salvarezon 11 Dec 2012 at 11:46 pm

    # davidn.tgs
    hey!
    I like your reply. I was not sure either about the last part of the last question but I was thinking that they skip the social cost too. I’m not sure about that but I agree with the rest of your answers.

  291. Patrickon 12 Dec 2012 at 12:34 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
    I think the overconsumption of alcohol is a market failure since along this excessive use a lot of negative externalities come along. To overconsumption of alcohol will result in a higher cost for the society than for the individual. Therefore, it will create more problems for the society than for the individual himself.

    If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    To reduce the, in this case, overconsumption of alcohol, they could higher the prices of alcohol by establishing higher taxes on these goods or put restrictions on the amount of alcohol bars and clubs are allowed to provide. This will have a major effect on demand for these tourist nations but will certainly reduce the alcohol consumption, not saying that there will be no overconsumption at all.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.
    When it's high season, meaning there is a lot of demand and the streets are filled with tourists, these bar would be extra full. Therefore there is a higher chance for alcohol overconsumption. But this alcohol overconsumption would be party beneficial for the owners of the bars and clubs since they provide the alcohol. There would be a lot of demand for alcohol ergo they make a lot of sales revenue. Although they benefit from this till a certain extent, where the drunken tourists break down the place, on the social aspect this wouldn't be so beneficial. When the tourists are done with drinking and the bars and clubs are closing, the tourists end up on the street. They might disturb the locals and cause trouble. All this trouble must be cleaned up or taken care of by the resort communities. This will result in extra costs for them and thus less beneficial for the society.

  292. tyingcharoenon 12 Dec 2012 at 4:03 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    The overconsumption of alcohol is and isn't a market failure. Firstly, since the consumption of alcohol by britons in other countries across Europe has caused mass riots, serious injuries and even deaths, the social cost of these effects are paid by the country in which these incidents occur. Therefore, when a Briton causes a riot in Spain, than the public service provided by the government which could be the police, will be used in preventing violence. Therefore, the tax money paid by Spanish citizens for the existence of the police is used from an effect of consuming alcohol by Britons. Therefore, the private benefit that the Britons are receiving (drinking and rioting) diverges from the social benefit, and the distance of the divergence becomes the marginal social cost which a foreign government has to pay for. However, it could be argued that the riots and violence is a minor cost compared to the revenue that local pubs and bars receive in Europe. Therefore, it could be viewed as allocating resources (tourists) efficiently, depending on the total cost of damage they cost, if it exceeds the social benefit or not.

    If the tourist nations were serious about cracking down on drunk tourists, what economci actions could they take in the resort communities where most of the trouble occurs?

    If the tourist nations were to make an economic approach in solving the problems on drunk tourists, they could impose a higher tax on the resort communities. The tax however, will be equivalent to the marginal social cost that is expected to occur, such as the use of ambulance, medical tools and law enforcers such as the police. This alternative is likely to be effective because alcohol is price inelastic, and therefore tourists will not react much to the increase in price. Another alternative could be making it mandatory for tourists to buy insurances, which would convert the accidents to occur in non-pure public services. Regardless of what happens in whatever location, tourists have already payed for the social cost prior.

    How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

    Proprietors of bars and clubs in resort communities are benefitting because they are receiving money from the taxpayers who consume alcohol at their locations. Not only are the taxpayers paying for the alcohol, but they are also responsible for their own welfare incase some sort of accident occurs in the location. Therefore the proprietors do not have to pay for the damage on the taxpayers. The private cost does reflect the social cost in a place like Malia, Greece. Judging from the amount of pubs and bars opened, the private cost is most likely below the social cost, and this leads to negative externalities of consumption. Bars only have to take account of their financial requirements in opening such as the products and license, whereas tax payers take account of their consumption and their physical behavior which becomes a large social cost.

  293. tyingcharoenon 12 Dec 2012 at 4:17 pm

    I agree with your idea on how the violence not only effects the resort communities, but the locals who are located near the location. This effects the stability in terms of safety, which becomes another social cost that the government is holding account for. Another environmental cost could be the quality of the people who are in the area, which effects the ethics of the community. Pubs and bars produces more external costs than the visual scenario. Property prices around these locations that are housing residents in that district will lose a lot property value since it is inhabitable based on the noise pollution, another external cost that these proprietors do not pay for.

  294. rpilleon 13 Dec 2012 at 6:00 pm

    • The over consumption of alcohol is a market failure because the people who drink alcohol create spill over costs. These costs are for additional health care and police forces.
    • To control the consumption of alcohol in touristic resorts the government could increase the taxes on alcohol. With an increase in price the demand for alcohol would decrease. Furthermore the government could make restrictions on how many bars or clubs are allowed to sell alcohol.
    • When people go bars they usually drink a lot of alcohol. If a lot of people go to bars or clubs it is likely that there will be an overconsumption of alcohol. The more alcohol that is sold the higher the revenue of the bars or clubs. This is beneficial for them. However when the people start damaging the bar or something else it becomes less beneficial. In this case the social cost would rise because the government would have to pay for the damage on the street.

  295. Andreas K.on 13 Dec 2012 at 7:26 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    I think that overconsumption of alcohol is a market failure, because there are several negative externalities. The overconsumption leaves high costs for the public, rather than to the individual that decided to drink excessive alcohol.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If tourist nations were serious about cracking down on drunken tourists, then they should set a price floor above the current price and therefore decreasing the quantity taken. It would decrease the demand for alcohol which means that less people will take alcohol and therefore there’s less trouble.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.

    In the main season of tourism, the bars and clubs might benefit, because since there are more people in the streets it will be most likely that they go into the bars and spend some money on drinks. Seen this way, the bar and club owners have a higher income, but there it’s not beneficial on the social side. There is a higher risk of the trouble causers, because the people will cause more trouble when they’re drunk.

  296. Andreas K.on 13 Dec 2012 at 7:31 pm

    rpille, I agree with your post, but could a price floor a good idea for the second question?

  297. TranHon 14 Dec 2012 at 9:45 pm

    Is over-consumption of alcohol a market failure? If so, what type of failure could it be classified as?
    Yes, alcohol over-consuming is a market failure. I would classify it as negative externality because drinking alcohol is bad for health of the people who consume it.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could make a rule about drinking alcohol, for example, depends on what level of the situation was, they could either ask the drunken tourist to pay money or force them to leave the resort because of the sake of other guests.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.
    I believe that bars and clubs in resort communities can make quite a lot of benefits buy selling alcohol since usually, the price of alcohol there are more expensive than when you buy it at the store. Plus, especially some resorts don’t want their guests to drink there, in this case, the alcoholics will probably find some places like bars or clubs to drink. And yes, I think that the private cost reflects the social cost because for the instance the tourist is drunk and damages the property of the bar/club, then they are not beneficial. In this case, the social private price will be higher than social price.

  298. click the up coming poston 19 Sep 2014 at 5:34 pm

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    Economics in Plain English » Negative externalities of consumption: Britain?s ?inebriated hooligans?

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