Alcohol consumption is associated with costs to society due to its impact on crime and health. Tax can lead consumers … to internalise these externalities. We study optimal corrective taxation in the alcohol market. We allow for the fact … products can improve welfare relative to a single tax rate on ethanol. We estimate a model of demand in the UK alcohol market …

We study optimal corrective taxation in the alcohol market. Consumption generates negative externalities that are non …-linear in the total amount of alcohol consumed. If tastes for products are heterogeneous and correlated with marginal … framework and empirically for the UK alcohol market. Welfare gains from optimally varying rates are higher the more concentrated …