In his article, “Time to end Pennsylvania’s Monopoly on Liquor Sales,” Philip Heron, a native Pennsylvanian and editor of Delaware County Daily News, voices his opinion on Pennsylvania’s restrictive alcohol law and urges for change. Pennsylvania is an alcohol beverage control state; thus, citizens may only purchase wine or liquor at state owned Fine Wine and Good Spirits stores. Similarly to these products, single bottles and six-packs of beer can only be purchased in state licensed taverns or restaurants; furthermore, cases or kegs must be purchased from state licensed beer retailers or distributors. Importing any liquor or beer into Pennsylvania from another state is illegal, according to the law; therefore, Pennsylvania’s law transforms
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There are three ways for a firm to become a monopoly: first, the firm owns a key resource, secondly, the government gives a single firm the exclusive right to produce a good, or lastly, a single firm can produce the market quantity at a lower cost than other firms. In the alcohol market, the Pennsylvania government created a monopoly because by law only state owned stores are granted the right to sale liquor. This monopoly has the market power; consequently, it sets the price of the liquor throughout the state, and the price remains the same until the Pennsylvania Liquor Control Board approves a change. As a monopoly the Fine Wine and Good Spirits stores have no competition; therefore, they offer a limited selection with higher prices, and the law restricts the quantity and dictates when alcohol is available for purchase. Monopolies can also lead to price discrimination. Price discrimination is charging a different price for the identical good or service such as a higher rate during peak hours or volume discount. A price-discriminating monopoly subdivides its customers into different categories based on their willingness to purchase a product or service such as a commuter or casual traveler for the travel industry; however, a monopoly does not discriminate based on race, gender, or stereotypes toward any …show more content…
Phil proposes to change the law to allow all forms of alcohol to be bought in one location such as a supermarket, and he even discussed the matter with former state Representative Ron Raymond, a member of the committee supervising the Pennsylvania Alcohol Control Board. Heron’s plan is to privatize the alcohol industry into a perfectly competitive market or a monopolistically competitive market rather than a state controlled monopoly. A perfectly competitive market involves many buyers and sellers; additionally, there are no barriers to enter allowing multiple firms to provide the identical product. The firms are price takers, so the price is constant and taken by the whole industry; therefore, one firm will not increase its price independently; consequently, the cost of goods are lower. In monopolistic competition many firms produce heterogeneous products that are different in brand or quality; thus, this product differentiation leads to non-price competition which allows the firms to be price setters because the buyers are not fully educated about the products. Monopolies, perfectly competitive markets, and monopolistically competitive markets all maximize their profits when their marginal revenue equals marginal
There are three ways for a firm to become a monopoly: first, the firm owns a key resource, secondly, the government gives a single firm the exclusive right to produce a good, or lastly, a single firm can produce the market quantity at a lower cost than other firms. In the alcohol market, the Pennsylvania government created a monopoly because by law only state owned stores are granted the right to sale liquor. This monopoly has the market power; consequently, it sets the price of the liquor throughout the state, and the price remains the same until the Pennsylvania Liquor Control Board approves a change. As a monopoly the Fine Wine and Good Spirits stores have no competition; therefore, they offer a limited selection with higher prices, and the law restricts the quantity and dictates when alcohol is available for purchase. Monopolies can also lead to price discrimination. Price discrimination is charging a different price for the identical good or service such as a higher rate during peak hours or volume discount. A price-discriminating monopoly subdivides its customers into different categories based on their willingness to purchase a product or service such as a commuter or casual traveler for the travel industry; however, a monopoly does not discriminate based on race, gender, or stereotypes toward any …show more content…
Phil proposes to change the law to allow all forms of alcohol to be bought in one location such as a supermarket, and he even discussed the matter with former state Representative Ron Raymond, a member of the committee supervising the Pennsylvania Alcohol Control Board. Heron’s plan is to privatize the alcohol industry into a perfectly competitive market or a monopolistically competitive market rather than a state controlled monopoly. A perfectly competitive market involves many buyers and sellers; additionally, there are no barriers to enter allowing multiple firms to provide the identical product. The firms are price takers, so the price is constant and taken by the whole industry; therefore, one firm will not increase its price independently; consequently, the cost of goods are lower. In monopolistic competition many firms produce heterogeneous products that are different in brand or quality; thus, this product differentiation leads to non-price competition which allows the firms to be price setters because the buyers are not fully educated about the products. Monopolies, perfectly competitive markets, and monopolistically competitive markets all maximize their profits when their marginal revenue equals marginal