Price Elasticities
Price elasticity shows the relationship between price changes and consumption. Larger elasticities will show that a greater increase in price leads to a greater drop in consumption volume.Research suggests a range of price elasticities for alcoholic beverages. Therefore, we provide two well-regarded estimates: the Leung and Phelps (1993) statistic provides a conservative estimate of the projected increased revenue; the Wagenaar (2009) statistic is based on more recent U.S. data. For instance, using the Leung and Phelps elasticity measure will provide a smaller revenue increase and a larger drop in alcohol consumption than the Wagenaar estimate.
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Leung and Phelps (1993):
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Wagenaar (2009):
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