A non-linear approach to alcohol consumption decisions: monopoly versus competition

Abstract

One of the public health objectives of the Swedish and Danish alcohol policies is to reduce harm to individuals from the risky consumption of alcohol. In furtherance of this objective, it is interesting to research the purchasing and consumption patterns of drinkers, with a particular focus on clarifying the purchasing behavior of heavy drinkers relative to moderate and light drinkers. Thus, this article examines demand for alcoholic beverages in Denmark and Sweden. Since there are significant differences in alcohol policy in Denmark and Sweden, it is interesting to study a comparative analysis of consumer behavior. Our study included a randomly drawn sample of the alcohol-buying population in both countries. A proportional odds model was applied to capture the natural ordering of dependent variables and any inherent nonlinearities. The findings show that individual demand for alcoholic beverages depends on economic, regional, and socio-demographic variables but that there is also a heterogeneity in consumer response to alcohol consumption under competition and monopoly. This study provides some evidence and support to the notion that people can generally be characterized by certain factors associated with alcohol demand. This information can help policymakers when they discuss concepts related to public health issues.