Is liquor an efficient market?

Efficient markets use available information to adjust prices. But consumers don’t have all the information. Here’s help.

Efficient markets use available information to adjust prices. But consumers don’t have all the information. Here’s help.

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You’re shopping for liquor and looking at prices.  The price you are looking at doesn’t include the taxes.  How do you find the lowest prices?  As a rational buyer, you will want the most for your money.

The model most used by economists and politicians is called the “Efficient Market.”  When they are talking about markets, this is the market they are talking about. The efficient market model was developed using data from horse racing.  An efficient market uses all available information to find the true price.

If you have complete information, you get an efficient market.  If you have less information, you may not get the most for your money.  According to the theory, markets adjust pricing to the best price: you will get more for your money if you have more information.  Current pricing at the stores leaves people scratching their heads and getting sticker shock.

Information wants to be free and efficient markets are supposed to deliver the best prices.  One way to get the best pricing is to let the public in on the price structure.  Many liquor sellers and advertisements don’t show the complete cost.  Unlike other items, there is a 20.4% sales tax and a flat tax of $2.83 for 750 ml.

Here’s some help - a handy tax table that shows the final cost to you, the consumer.

About Paul deArmond

Closed Account • Member since May 29, 2009

Paul de Armond was a writer, reporter and research analyst. He is the recipient of the Whatcom Human Rights Task Force 2001 Human Rights Award. In the 1990s, he and Jay [...]

Comments by Readers

Tip Johnson

Jun 10, 2012

Well, if I was a drinking man, I would be outraged - except outrage is so frowned upon these days.  Remember when it was OK to be outraged at the outrageous and to ridicule the ridiculous.  It was our civic duty! 

Now it is almost tantamount to terrorism.
It’s enough to drive a man to drink - but not at these prices!

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Larry Horowitz

Jun 11, 2012

Tip,

Sometimes your insights are truly amazing.  Your remark that “to be outraged at the outrageous and to ridicule the ridiculous… is almost tantamount to terrorism” is, well, remarkable.

In fact, it some cases, under The Patriot Act, it is tantamount to terrorism.

Consider the case, arrest and trial of CIA “Asset” Susan Lindauer who tried to expose some outrageous and ridiculous stuff.  Her book, Extreme Prejudice: The Terrifying Story of the Patriot Act and the Cover Ups of 9/11 and Irag - The Ultimate Conspiracy to Silence Truth” is certainly worth a read.

http://wcls.bibliocommons.com/item/show/981937044_extreme_prejudice

[Paul - sorry for the off topic comment.]

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Paul deArmond

Jun 18, 2012

No problem, Larry.  At least you didn’t link to one of Alex Jones’ conspiracy sites.

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