Monday, 16 August 2010

Less liquor stores means ........

monopoly profits! According to this article at
A long-forgotten bill that lets anyone object to liquor stores being built in their neighbourhood will make a timely return to parliament this week.
Does anyone really think this will reduce the amount of alcohol consumed? If people want to buy alcohol they will just have to drive a little bit further to do it, that's all. That is unlikely to stop them drinking.

What it will do is make the existing liquor stores very, very happy as they now have a great way to reduce competition. Less competition just means more profits for the stores lucky enough to be in place now. The big liquor chains, like Liquorland and Liquor King, must love this bill. They have stores in place already in the areas they want them, and now they could have a huge barrier to entry for anyone want to challenge their dominance of the market. All they have to do is object themselves, or pay (under the table) someone else to do it for them and at the very least they can slow down the approval of the granting of a new licence for a competitor. With luck they could stop it altogether. I wonder what the Commerce Commission will have to say about this. This has to be one of the most anti-competitive ideas put forward in years.

The Stuff article also says,
It was supported on a conscience vote by every National Party member at its first reading - only Act Party MPs Rodney Hide and Heather Roy voted against it.
Well done Rodney and Heather.


Eric Crampton said...

In their view, alcohol is a bad. Monopoly provision of a bad is preferred to competitive provision because, while there are excess profits, quantity is restricted.

The Commerce Commission may well punt saying that it's a matter of government policy that liquor retail be cartelized, just as they punt over Zespri.

Paul Walker said...

You are most likely right on both points. But to make matters worse the government could try to regulate profits. So we end up with more regulation to "fix" problems with the first bit of regulation. This would lead to even more problems and thus even more regulation .............

dragonfly said...

The sale of alcohol in the area we live in used to be controlled by a trust (until it was voted out). One thing you could guarantee from the trust-run alcohol store was high prices, also a huge, indistinguishable jumble of bottles and casks of various descriptions all over the shop floor, and appalling service. Once when I went in there the young guy serving was watching something rude on TV, and continued to do this fixedly as customers queued and he served them, barely acknowledging their existence, while sniggering and snorting intermittently and loudly at what he was watching. We tended to travel to buy alcohol, mostly because of the high prices (if it had been cheaper I could have lived with the service – there was an entertaining, surreal side to that).