Comments on: Negative externalities of consumption: Britain’s “inebriated hooligans” http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/ for students and teachers of Economics Wed, 08 Feb 2012 23:39:55 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Konstantin Frank http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20426 Konstantin Frank Tue, 03 Jan 2012 21:29:14 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20426 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 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

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]]> By: Konstantin Frank http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20425 Konstantin Frank Tue, 03 Jan 2012 21:25:20 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20425 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. 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.

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]]> By: skalra2 http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20283 skalra2 Wed, 28 Dec 2011 05:43:08 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20283 @ 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. @ 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.

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]]> By: Sakshi http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20282 Sakshi Wed, 28 Dec 2011 05:35:38 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20282 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. 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.

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]]> By: Rueveyde http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20100 Rueveyde Tue, 20 Dec 2011 04:52:01 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20100 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. 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.

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]]> By: Mmecathum http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20077 Mmecathum Mon, 19 Dec 2011 09:17:19 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20077 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 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

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]]> By: Mmecathum http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-20076 Mmecathum Mon, 19 Dec 2011 09:11:48 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-20076 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 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

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]]> By: ctoantran2 http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-3/#comment-19936 ctoantran2 Wed, 14 Dec 2011 23:21:38 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19936 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? 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?

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]]> By: ctoantran2 http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-19934 ctoantran2 Wed, 14 Dec 2011 23:15:42 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19934 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. 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.

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]]> By: mlopezrubio2 http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-19928 mlopezrubio2 Wed, 14 Dec 2011 19:31:18 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19928 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. 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.

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]]> By: mlopezrubio2 http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-19926 mlopezrubio2 Wed, 14 Dec 2011 19:23:00 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19926 •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. •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.

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]]> By: Rory Thornton http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-19897 Rory Thornton Wed, 14 Dec 2011 02:27:42 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19897 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. 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.

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]]> By: ssewell http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-3/#comment-19893 ssewell Tue, 13 Dec 2011 22:58:13 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19893 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. 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.

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]]> By: MMartinsons http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-19892 MMartinsons Tue, 13 Dec 2011 22:56:40 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19892 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. 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.

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]]> By: MMartinsons http://welkerswikinomics.com/blog/2009/03/10/britains-largest-export-inebriated-hooligans/comment-page-4/#comment-19891 MMartinsons Tue, 13 Dec 2011 22:50:19 +0000 http://welkerswikinomics.com/blog/2008/08/25/britains-largest-export-inebriated-hooligans/#comment-19891 - 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. - 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.

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