Vice Squad
Tuesday, April 27, 2004
Selling Beer at a Loss

Norway is not a member of the European Union, so Norway has not been party to the many alterations of alcohol policies throughout other European countries that have been inspired by EU regulations and expansion. Further, Norway continues to tax alcohol at higher rates than any other European country. Nonetheless, a price war has broken out among licensed beer sellers in Norway, cutting the price of a bottle of beer by more than one-half. In fact, the going price is lower than the tax, meaning that the retailers are actually losing money (indeed, quite a bit of money, more than 100% of the wholesale price) on each bottle of beer that they sell.

The government is rescuing the sellers from their own competitive propensities, however, by declaring that such low prices are a violation of the alcohol laws. To protect their licenses to sell beer, then, retailers have to raise prices. When this became clear on Friday, a rush to buy the cheap beer while it lasted ensued, of course.

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